Document:

Exhibit
10.7

EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT (the “Agreement”), amended
and restated effective as of February 8, 2006, by and between VONAGE HOLDINGS
CORP., a Delaware corporation (the “Company”), and Jeffrey A. Citron
(the “Executive”).

WHEREAS, the Company and the Executive entered into an
employment agreement, dated as of September 1, 2005 (the “Prior Agreement”);
and

WHEREAS, the Company and the Executive desire to
provide for the continued employment of the Executive and to amend and restate the
Prior Agreement with this Agreement;

NOW, THEREFORE, in consideration of the covenants and
agreements hereinafter set forth, the parties agree as follows:

1.             Employment and Duties.  (a)  General.  The Executive shall serve as Chairman of the
Board of Directors of the Company (the “Board”) and Chief Strategist
reporting to the Board.  The Executive
shall have responsibility for the Company’s overall strategy, technology
matters, employee culture and public relations, and such other
responsibilities, powers and authority as may be granted to the Executive by
the Board from time to time, which shall be consistent with the Executive’s
position.  For the purpose of this
Agreement, (i) “overall strategy” means the Company’s entry into significant
new lines of business and withdrawal from existing lines of business, the
Company’s acquisition and/or dispositions of business units or entities,
partnerships or joint ventures of the Company with other companies, the “go to
market” strategy with regard to the Company’s sale and marketing of its
products and services, the Company’s significant shareholder relations, and
positioning the Company with regard to public policy matters, (ii) “technology
matters” means network operations, research and development of new products and
services, and overall integration of the Company’s technology-based activities
into the Company’s strategy, and (iii) “employee culture and public relations”
means communicating internally and externally regarding Company cultural
values, events and activities, as well as its products and services.  The Executive agrees that, to the best of his
ability and experience, he shall at all times conscientiously perform all of
the duties of his position.  The
Executive’s principal place of employment shall be the principal offices of the
Company, which currently are located in the Holmdel, New Jersey area; provided,
however, that the Executive understands and agrees that he shall be
required to travel from time to time for business reasons.

(b)           Exclusive Services.  For so long as the Executive is employed by
the Company, the Executive shall devote his full-time working time to his
duties hereunder, shall faithfully serve the Company, shall in all respects
conform to and comply with the lawful and good faith directions and
instructions given to him by the Board and shall use his best efforts to
promote and serve the interests of the Company. 
Further, the Executive shall not, directly or indirectly, render
services to any other person or organization without the consent of the Company
or otherwise engage in activities that would interfere significantly with the
faithful 

 

 

performance of his duties
hereunder.  Notwithstanding the
foregoing, the Executive may serve on (i) corporate boards, with the Board’s
prior consent or (ii) civic or charitable boards or engage in charitable
activities without remuneration therefore, provided that such activities
do not contravene the first sentence of this Section 1(b).

2.             Term of Employment.  The Executive’s employment under this
Agreement shall commence as of September 1, 2005 (the “Effective Date”)
and shall terminate on the earlier of (i) December 31, 2008 and (ii) the
termination of the Executive’s employment under this Agreement; provided,
however, that the Term (as defined below) of the Executive’s employment
shall be automatically extended without further action of either party for
additional one-year periods, unless written notice of either party’s intention
not to extend has been given to the other party at least 90 days prior to the
expiration of the then effective Term. 
Notwithstanding anything to the contrary herein, in the event of a
Change in Control of the Company (as such term is defined in the Company’s 2001
Stock Incentive Plan (as amended through April 20, 2005) (the “Stock
Incentive Plan”), as it may be amended from time to time), the Term under
this Agreement shall be automatically extended without further action of either
party for an additional one-year period from the date of such Change in
Control, subject to further automatic renewals as provided above.  The period from the Effective Date until the
termination of the Executive’s employment under this Agreement is referred to
as the “Term”.

3.             Compensation and Other Benefits.  Subject to the provisions of this Agreement,
the Company shall pay and provide the following compensation and other benefits
to the Executive during the Term as compensation for services rendered
hereunder:

(a)           Base Salary.  The Company shall pay to the Executive an
annual base salary (the “Base Salary”) at the rate of $600,000, payable
in substantially equal installments at such intervals as may be determined by
the Company in accordance with its ordinary payroll practices as established
from time to time.  The Base Salary shall
be reviewed by the Compensation Committee of the Board of Directors in good
faith, based upon the Executive’s performance, not less often than annually.

(b)           Annual Cash Bonus.  For each fiscal year during the Term, the
Executive shall be eligible to receive an annual discretionary
performance-based bonus in accordance with the Company’s annual bonus program,
as applicable to senior executives as in effect from time to time, at a target
annual amount equal to one hundred percent (100%) of Base Salary.  The amount, if any, of the Executive’s annual
bonus shall be determined by the Compensation Committee of the Board, based
upon the Executive’s performance as Chairman and Chief Strategist of the
Company and upon the performance of the Company.  The bonus shall be prorated for any year in
which the Executive’s employment is terminated due to (i) the Executive’s
resignation for Good Reason (as defined in Section 4(a)(iii) below); (ii) the
Company’s termination of the Executive’s employment without Cause (as defined
in Section 4(a)(ii) below); or (iii) the Executive’s death or disability (as
defined in Section 4(b)(i) below).  If
the Executive’s employment with the Company is terminated by the Company for
Cause or the Executive resigns from his employment other than for Good Reason
prior to the scheduled payout of the bonus due for a fiscal year, the Executive
shall not receive any portion of such bonus. 
The Executive’s annual bonus shall be paid at the same time as the
Company pays bonuses to its other executives, but in no event later than the
earlier of (i) 90 days following the 

 

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close of each fiscal year of
the Company and (ii) the latest date on which payment can be made without the
Executive incurring additional tax liability under Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).

(c)           Equity Incentive Compensation.  During the Term, the Executive shall be
eligible to participate in the Company’s equity compensation plans and programs
generally applicable to senior executives of the Company as in effect from me
to time, including without limitation, the Stock Incentive Plan; provided,
however, that it is the present intention of the Compensation Committee of the
Board, hereby acknowledged and accepted by the Executive, not to consider any
further equity incentives for the Executive prior to the 2007 calendar year.

(d)           Employee Benefit Plans.  The Executive shall be entitled to
participate in all employee welfare, pension and fringe benefit plans, programs
and arrangements of the Company, in accordance with their respective terms, as
may be amended from time to time, and on a basis no less favorable than that
made available to other senior executives of the Company.  In addition, during the Term (but only
beginning on the date the Executive obtains such a policy) the Company shall
provide the Executive with a term life insurance policy that provides for a
death benefit of at least $1.5 million, with the cost of any premium payments
paid by the Company.

(e)           Expenses.  The Company shall reimburse the Executive for
reasonable travel and other business-related expenses incurred by the Executive
in the fulfillment of his duties hereunder upon presentation of written
documentation thereof, in accordance with the applicable expense reimbursement
policies and procedures of the Company as in effect from time to time.  With respect to reasonable business-related
airline expenses, the Executive shall be eligible for air travel reimbursement
based on the cost of a first-class ticket on a commercial airline to and from
the Executive’s business destination(s). 
Any additional business-related airline expenses incurred, directly or
indirectly, by the Executive with respect to other employees of the Company shall
be paid in accordance with the Company’s travel policy as in effect from time
to time.

(f)            Vacation.  The Executive shall be entitled to 15
vacation days for each fiscal year during the Term.

(g)           Other Benefits and Perquisites.  The Executive shall be entitled to such other
benefits and perquisites as may be available generally to other senior
executives of the Company.

4.             Termination of Employment.  (a)  Termination
for Cause; Resignation Without Good Reason. 
(i)  If, prior to the expiration
of the Term, the Company terminates the Executive’s employment for Cause or if
the Executive resigns from his employment hereunder other than for Good Reason,
the Executive shall only be entitled to payment of any unpaid Base Salary
through and including the date of termination or resignation and any other
amounts or benefits required to be paid or provided by law or under any plan,
program, policy or practice of the Company (the “Other Accrued Compensation
and Benefits”).  The Executive shall
have no further right to receive any other compensation or benefits after such
termination or resignation of employment.

 

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(ii)           For purposes of this Agreement, “Cause”
shall mean termination of the Executive’s employment due to:  (A) any act or omission that constitutes a
breach by the Executive of any of his obligations under this Agreement; (B) the
willful and continued failure or refusal of the Executive (not as a consequence
of illness, accident or other disability) to satisfactorily perform the duties
reasonably required of him as an employee of the Company; (C) the Executive’s
conviction of, or plea of nolo contendere
to, (x) any felony or (y) another crime involving dishonesty or moral turpitude
or which could reflect negatively upon the Company or otherwise impair or
impede its operations; (D) the Executive’s engaging in any misconduct,
negligence, act of dishonesty, violence or threat of violence (including any
violation of federal securities laws) that is injurious to the Company or any
of its subsidiaries or affiliates (collectively, the “Company Group”);
(E) the Executive’s material breach of a written policy of the Company or the
rules of any governmental or regulatory body applicable to the Company; (F) the
diverting or usurping of a corporate opportunity of the Company Group by the
Executive; (G) the Executive’s refusal to follow the lawful directions of the
Company; or (H) the Executive’s willful failure to comply with any of the
material terms of this Agreement or any other willful misconduct by the
Executive which is materially injurious to the financial condition or business
reputation of the Company Group); provided, however, that no
event or condition described in clauses (A), (B) or (H) shall constitute Cause
unless (i) the Company first gives the Executive written notice of its
intention to terminate his employment for Cause and the grounds for such
termination and (ii) such grounds for termination (if susceptible to
correction) are not corrected by the Executive within 15 days of his receipt of
such notice (or, in the event that such grounds cannot be corrected within such
15-day period, the Executive has not taken all reasonable steps within such
15-day period to correct such grounds as promptly as practicable thereafter).

(iii)          For purposes of this Agreement, “Good
Reason” shall mean termination of employment with the Company by the
Executive because of the occurrence of any of the following events without the
Executive’s prior written consent:  (A) a
decrease in the Executive’s Base Salary or a failure by the Company to pay
material compensation due and payable to the Executive in connection with his
employment; (B) a material diminution of the responsibilities, positions or
titles of the Executive from those set forth in this Agreement, including
without limitation, ceasing to be the most senior officer of a company (whether
the Company or its ultimate parent) following a Change in Control; (C) the
Company requiring the Executive to be based at any office or location more than
50 miles from the Edison, New Jersey area; (D) the Company’s delivery of a
notice of non-renewal of the Term following a Change in Control of the Company;
or (E) a material breach by the Company of any term or provision of this
Agreement; provided, however, that no event or condition
described in clauses (A) through (E) shall constitute Good Reason unless (x)
the Executive gives the Company written notice of his intention to terminate
his employment for Good Reason and the grounds for such termination and (y)
such grounds for termination (if susceptible to correction) are not corrected
by the Company within 15 days of its receipt of such notice (or, in the event
that such grounds cannot be corrected within such 15-day period, the Company has
not taken all reasonable steps within such 15-day period to correct such
grounds as promptly as practicable thereafter).

(b)           Termination without Cause;
Resignation for Good Reason.  (i)  If, prior to the expiration of the Term, the
Executive’s employment is terminated by the Company without Cause, or if the
Executive resigns from his employment hereunder for Good Reason, the 

 

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Executive shall be entitled
to (A) a lump sum cash payment equal to two times the Executive’s Base Salary
(as in effect on the date of such termination or resignation, as the case may
be) which shall be paid within 15 days of the effective date of the Release (as
defined below); (B) a lump sum cash payment equal to two times the bonus that
the Executive earned in the calendar year prior to the year in which the
termination or resignation occurs (the “Prior Year’s Bonus”); (C) a lump sum
cash payment equal to the pro rata portion of the Executive’s bonus for the
year in which the termination or resignation, as the case may be, occurs based
upon the Prior Year’s Bonus, which shall be paid within 15 days of the
effective date of the Release; (D) continued payment by the Company of the
group medical, dental and vision continuation coverage premiums for the
Executive and the Executive’s eligible dependents under Title X of the
Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”),
for a period of 18 months following the date of termination or resignation, as
the case may be under the Company’s group health plans, as then in effect; (E)
100% accelerated vesting and exercisability, as applicable, of the unvested
portion of the Executive’s unvested equity-based or other long-term incentive
awards, without regard to the satisfaction of any performance criteria; (F)
exercise the stock options for a period of 12 months following the date of
termination or resignation, as the case may be, (subject to earlier
termination, other than as a result of termination of employment, as may be provided
in the Stock Incentive Plan and any stock option agreements); and (G) the Other
Accrued Compensation and Benefits.  The
Executive shall have no further rights under this Agreement or otherwise to
receive any other compensation or benefits after such termination or
resignation of employment.

(ii)           The Company shall not be required to
make the payments and provide the benefits provided for under Section 4(b)(i),
unless the Executive executes and delivers to the Company, a release (the “Release”)
in a form acceptable to the Company, and the Release has become effective and
irrevocable in its entirety.

(iii)          If, following a termination of
employment without Cause or a resignation for Good Reason, the Executive
breaches the provisions of Section 5 or 7 hereof, the Executive shall not be
eligible, as of the date of such breach, for the payments and benefits
described in Section 4(b)(i), and any and all obligations and agreements of the
Company with respect to such payments shall thereupon cease.

(c)           Termination Due to Disability or
Death.  The Executive’s employment
with the Company shall terminate automatically on the Executive’s disability or
death.  In the event of termination of
the Executive’s employment by reason of the Executive’s disability or death, the
Executive or the Executive’s estate, as the case may be, shall be entitled
to:  (i) a lump sum cash payment equal to
the pro-rata portion of the Executive’s bonus for the year in which the
termination of employment occurs based upon the Prior Year’s Bonus, payable
within 15 days of the Executive’s disability or death; (ii) the Executive’s
Base Salary through and including the date of termination; (iii) a lump sum
cash payment equal to 12 months of the Executive’s Base Salary (at the rate in
effect on the date the Executive’s employment is terminated) payable within 15
days of the Executive’s disability or death; (iv) a lump sum cash payment equal
to the Prior Year’s Bonus; (v) continued payment by the Company of the group
medical, dental and vision continuation coverage premiums for the Executive (if
applicable) and Executive’s eligible dependents under COBRA for a period of 18
months following the date of the Executive’s disability or death under the
Company’s group health plans, as then in effect; (vi) 

 

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100% accelerated vesting and
exercisability, as applicable, of the unvested portion of the Executive’s
unvested equity-based or other long-term incentive awards, without regard to
the satisfaction of any performance criteria; (vii) exercise the stock options
for a period of 12 months following the Executive’s disability or death; and
(viii) the Other Accrued Compensation and Benefits.  For purposes of this Agreement, “disability”
means that the Executive (i) is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months, or (ii) is, by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefit for a period of not less
than three months under an accident and health plan covering employees of the
Executive’s employer.

(d)           Change in Control Benefits.  Immediately prior to a Change in Control 100%
of the any unvested equity-based or other long-term incentive awards shall fully
vest and become exercisable, to the extent applicable, without regard to the
satisfaction of any performance criteria and shall otherwise be subject to the
terms and conditions of the Stock Incentive Plan and any award agreements.

(e)           Notice of Termination.  Any termination of employment by the Company
or the Executive shall be communicated by a written “Notice of Termination”
to the other party hereto given in accordance with Section 23 of this
Agreement.  In the event of a termination
by the Company for Cause, or resignation by the Executive for Good Reason, the
Notice of Termination shall (i) indicate the specific termination provision in
this Agreement relied upon, (ii) set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated and (iii) specify the date of
termination, which date shall not be more than 30 days after the giving of such
notice.  The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

(f)            Resignation from Directorships
and Officerships.  The termination of
the Executive’s employment for any reason shall constitute the Executive’s
resignation from (i) any director, officer or employee position the Executive
has with the Company Group and (ii) all fiduciary positions (including as a
trustee) the Executive holds with respect to any employee benefit plans or
trusts established by the Company.  The
Executive agrees that this Agreement shall serve as written notice of
resignation in this circumstance.

(g)           Gross-Up Payment.  (i)  In
General.  If, during the term of the
Executive’s employment, there is a change in ownership or control of the Company
that causes any payment or distribution by the Company to or for the benefit of
the Executive (whether paid or payable or distributed or distributable pursuant
to the terms of this Agreement or otherwise, but determined without regard to
any additional payments required under this Section 4(g)) (a “Payment”)
to be subject to the excise tax imposed by Section 4999 of the Code (such
excise tax, together with any interest or penalties incurred by the Executive
with respect to such excise tax, the “Excise Tax”), 

 

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then the Executive shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including any income
taxes (and any interest and penalties imposed with respect thereto) and Excise
Tax imposed upon the Gross-Up Payment, the Executive shall retain an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

(ii)           Determination of the Gross-Up
Payment.  Subject to the provisions
of Section 4(g)(iii), all determinations required to be made under this Section
4(g)(ii), including whether and when a Gross-Up Payment is required and the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by a certified public accounting firm
designated by the Company and reasonably acceptable to the Executive (the “Accounting
Firm”), which shall provide detailed supporting calculations both to the
Company and the Executive within 15 business days of the receipt of notice from
the Executive that there has been a Payment with respect to which the Executive
in good faith believes a Gross-Up Payment may be due under this Section
4(g)(ii), or such earlier time as is requested by the Company.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company. 
Any Gross-Up Payment, as determined pursuant to this Section 4(g)(ii), shall
be paid by the Company to the Executive within five days of the later of (A)
the due date for the payment of any Excise Tax and (B) the receipt of the
Accounting Firm’s determination.  Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive.  As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which shall not have been made by the Company should have
been made (“Underpayment”), consistent with the calculations required to
be made hereunder.  In the event that the
Company exhausts its remedies pursuant to Section 4(g)(iii) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to the Executive or for the
Executive’s benefit.  The previous
sentence shall apply mutatis mutandis
to any overpayment of a Gross-Up Payment.

(iii)          Procedures.  The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than 10 business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.  The Executive shall not pay such claim prior
to the expiration of the 30-day period following the date on which it gives
such notice to the Company (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due).  If the Company notifies the Executive in
writing prior to the expiration of such period that it desires to contest such
claim, the Executive shall:  (A) give the
Company any information reasonably requested by the Company relating to such
claim, (B) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim
by an attorney reasonably selected by the Company, (C) cooperate with the
Company in good faith in order to effectively contest such claim, and (D)
permit the Company to participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and
expenses 

 

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(including additional
interest and penalties) incurred in connection with such contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any
Excise Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of costs and
expenses.  Without limiting the foregoing
provisions of this Section 4(g)(iii), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and conferences
with the taxing authority in respect of such claim and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to
prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, to the extent
permitted by law, the Company shall advance the amount of such payment to the
Executive on an interest-free basis (which shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid) and shall indemnify and
hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to
such advance; and provided further that any extension of the
statute of limitations relating to payment of taxes for the Executive’s taxable
year with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. 
Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

(iv)          Refund.  If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 4(g)(iii), the Executive
becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company complying with the requirements of
Section 4(g)(iii)) promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto).  If, after the Executive
receives an amount advanced by the Company pursuant to Section 4(g)(iii), a
determination is made that the Executive shall not be entitled to any refund
with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration
of 30 days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset,
to the extent thereof, the amount of Gross-Up Payment required to be paid.

5.             Confidentiality.  The Executive agrees to enter into and be
subject to the Company’s Employee Confidentiality and Innovations Agreement
substantially in the form attached as Exhibit A.

6.             Noncompetition.  The Executive agrees to enter into and be
subject to the Company’s Noncompete Agreement substantially in the form
attached as Exhibit B.

7.             Non-Solicitation.  The Executive agrees that for a period
commencing on the Effective Date and ending three years following the Executive’s
termination of employment with the Company (the “Restricted Period”),
the Executive shall not, directly or indirectly, (a) interfere with or attempt
to interfere with the relationship between any person who is, or was 

 

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during the then most recent
12-month period, an employee, officer, representative or agent of the Company
Group, or solicit, induce or attempt to solicit or induce any of them to leave
the employ of any member of the Company Group or violate the terms of their
respective contracts, or any employment arrangements, with such entities; or
(b) induce or attempt to induce any customer, client, supplier, licensee or
other business relation of any member of the Company Group to cease doing
business with any member of the Company Group, or in any way interfere with the
relationship between any member of the Company Group and any customer, client,
supplier, licensee or other business relation of any member of the Company
Group.  As used herein, the term “indirectly”
shall include, without limitation, the Executive’s permitting the use of the
Executive’s name by any competitor of any member of the Company Group to induce
or interfere with any employee or business relationship of any member of the
Company Group.

8.             Certain Remedies.  (a)  Injunctive
Relief.  Without intending to limit
the remedies available to the Company Group, including, but not limited to,
those set forth in Section 13 hereof, the Executive agrees that a breach of any
of the covenants contained in Sections 5 through 7 of this Agreement may result
in material and irreparable injury to the Company Group for which there is no
adequate remedy at law, that it shall not be possible to measure damages for
such injuries precisely and that, in the event of such a breach or threat
thereof, any member of the Company Group shall be entitled to seek a temporary
restraining order or a preliminary or permanent injunction, or both, without
bond or other security, restraining the Executive from engaging in activities
prohibited by the covenants contained in Sections 5 through 7 of this Agreement
or such other relief as may be required specifically to enforce any of the
covenants contained in this Agreement. 
Such injunctive relief in any court shall be available to the Company
Group in lieu of, or prior to or pending determination in, any arbitration
proceeding.

(b)           Extension of Restricted Period.  In addition to the remedies the Company may
seek and obtain pursuant to Section 13, the Restricted Period shall be extended
by any and all periods during which the Executive shall be found by a court
possessing personal jurisdiction over him to have been in violation of the
covenants contained in Sections 7 through 9 of this Agreement.

9.             Defense of Claims.  The Executive agrees that, during the Term,
and for a period of six months after termination of the Executive’s employment,
upon request from the Company, the Executive shall cooperate with the Company
in connection with any matters the Executive worked on during his employment
with the Company and any related transitional matters.  In addition, the Executive agrees to
cooperate with the Company in the defense of any claims or actions that may be
made by or against the Company Group that affect the Executive’s prior areas of
responsibility, except if the Executive’s reasonable interests are adverse to
the Company Group in such claim or action. 
The Company agrees to promptly reimburse the Executive for all of the
Executive’s reasonable travel and other direct expenses incurred, or to be
reasonably incurred, to comply with the Executive’s obligations under this
Section 9.

10.           Nondisparagement.  The Executive agrees to refrain from (i)
making, directly or indirectly, any derogatory comments concerning the Company
Group or any current or former officers, directors, employees or shareholders
thereof or (ii) taking any other action with respect to the Company Group which
is reasonably expected to result, or does result in,

 

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damage to the business or
reputation of the Company Group or any of its current or former officers,
directors, employees or shareholders. 
The foregoing restrictions shall not apply to any statements that are
made truthfully in response to a subpoena or other compulsory legal process.

11.           Sole Right to Severance.  This Agreement is intended to represent the
Executive’s sole entitlement to severance payments and benefits in connection
with the termination of his employment. 
To the extent the Executive is entitled to receive severance or similar
payments and/or benefits under any other Company plan, program, agreement, policy,
practice, or the like, severance payments and benefits due to the Executive
under this Agreement shall be so reduced.

12.           Source of Payments.  All payments provided under this Agreement,
other than payments made pursuant to a plan which provides otherwise, shall be
paid in cash from the general funds of the Company, and no special or separate
fund shall be established, and no other segregation of assets shall be made, to
assure payment.  The Executive shall have
no right, title or interest whatsoever in or to any investments which the
Company may make to aid the Company in meeting its obligations hereunder.  To the extent that any person acquires a
right to receive payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the Company.

13.           Arbitration.  Any dispute or controversy arising under or
in connection with this Agreement or otherwise in connection with the Executive’s
employment by the Company that cannot be mutually resolved by the parties to
this Agreement and their respective advisors and representatives shall be
settled exclusively by arbitration in New Jersey in accordance with the rules
of the American Arbitration Association before one arbitrator of exemplary
qualifications and stature, who shall be selected jointly by an individual to
be designated by the Company and an individual to be selected by the Executive,
or if such two individuals cannot promptly agree on the selection off the
arbitrator, who shall be selected by the American Arbitration Association.

14.           Nonassignability; Binding
Agreement.  (a)  By the Executive.  This Agreement and any and all rights,
duties, obligations or interests hereunder shall not be assignable or delegable
by the Executive.

(b)           By the Company.  This Agreement and all of the Company’s
rights and obligations hereunder shall not be assignable by the Company except
as incident to a reorganization, merger or consolidation, or transfer of all or
substantially all of the Company’s assets.

(c)           Binding Effect.  This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto, any successors to or assigns of
the Company and the Executives heirs and the personal representatives of the
Executive’s estate.

15.           Indemnification.  The Executive shall be covered under the
Company’s director and officer insurance policies and, subject to applicable
law, shall be provided indemnification to the maximum extent permitted by the
Company’s Bylaws and Certificate of Incorporation, with such insurance coverage
and indemnification to be in accordance with the 

 

10

 

Company’s standard practices
for senior executive officers but on terms no less favorable than provided to
any other Company senior executive or director.

16.           Withholding.  Any payments made or benefits provided to the
Executive under this Agreement shall be reduced by any applicable withholding
taxes or other amounts required to be withheld by law or contract.

17.           Amendment; Waiver.  This Agreement may not be modified, amended
or waived in any manner, except by an instrument in writing signed by both
parties hereto.  The waiver by either
party of compliance with any provision of this Agreement by the other party shall
not operate or be construed as a waiver of any other provision of this
Agreement, or of any subsequent breach by such party of a provision of this
Agreement.

18.           Governing Law.  All matters affecting this Agreement,
including the validity thereof, are to be governed by, and interpreted and construed
in accordance with, the laws of the State of New Jersey applicable to contracts
executed in and to be performed in that State.

19.           Survival of Certain Provisions.  The rights and obligations set forth in
Sections 5 through 13 hereof shall survive any termination or expiration of
this Agreement.

20.           Entire Agreement; Supersedes
Previous Agreements.  This Agreement,
together with the (i) Employee Confidentiality and Innovations Agreement and
(ii) Noncompete Agreement, contains the entire agreement and understanding of
the parties hereto with respect to the matters covered herein and supersedes
all prior or contemporaneous negotiations, commitments, agreements and writings
with respect to the subject matter hereof, including without limitation, the Prior
Agreement, all such other negotiations, commitments, agreements and writings
shall have no further force or effect, and the parties to any such other
negotiations, commitments, agreements or writings shall have no further rights
or obligations thereunder.

21.           Counterparts.  This Agreement may be executed by either of
the parties hereto in counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.

22.           Headings.  The headings of sections herein are included
solely for convenience of reference and shall not control the meaning or
interpretation of any of the provisions of this Agreement.

23.           Notices.  All notices or communications hereunder shall
be in writing, addressed as follows:

To the Company:

2147 Route 27

Edison, N.J. 08817 or

 

11

 

23 Main Street

Holmdel, N.J. 07722, whichever is the last address on record for the Company

Attention:  General Counsel

With a copy to:

Shearman & Sterling
LLP

599 Lexington Avenue

New York, N.Y. 10022

Attention:  John J. Cannon, III

To the Executive:

818 Linden Lane

Brielle, N.J. 08730 or the Executive’s last address on record with the Company

All such notices shall be
conclusively deemed to be received and shall be effective (i) if sent by hand
delivery, upon receipt or (ii) if sent by electronic mail or facsimile, upon
confirmation of receipt by the sender of such transmission.

IN WITNESS WHEREOF, the
Company has caused this Agreement to be signed by its officer pursuant to the
authority of its Board, and the Executive has executed this Agreement, as of
the day and year first written above.

	
   

  	
  VONAGE HOLDINGS CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Mort David

  
	
   

  	
   

  	
  Name:

  	
  Mort David

  
	
   

  	
   

  	
  Title:

  	
  Chairperson,
  Compensation Committee

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  

 

	
  ACCEPTED AND AGREED

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Jeffrey A. Citron

  	
   

  	
   

  	
   

  
	
  Jeffrey A. Citron

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  February 8, 2006

  	
   

  	
   

  	
   

  
					

 

 

12Exhibit
10.8

 

EMPLOYMENT
AGREEMENT

 

EMPLOYMENT AGREEMENT (the
“Agreement”), dated as of February 7, 2006, by and between VONAGE
HOLDINGS CORP., a Delaware corporation (the “Company”), and Michael
Snyder (the “Executive”).

 

WHEREAS, the Company has
determined that it is in the best interests of the Company and its shareholders
to enter into an employment agreement with the Executive and the Executive is
willing to serve as an employee of the Company, subject to the terms and
conditions of this Agreement;

 

NOW, THEREFORE, in
consideration of the covenants and agreements hereinafter set forth, the
parties agree as follows:

 

1.             Employment
and Duties.

 

(a)           General.
The Executive shall serve as Chief Executive Officer of the Company, reporting
to the Company’s Board of Directors (the “Board”). The Company shall
take all necessary and appropriate action to obtain stockholder consent to (i)
increase the number of directors on the Board, and (ii) elect Executive as a
director on the Board. The Executive shall have responsibility for the
day-to-day management and operation of the business of the Company, including
the supervision of the Company’s finance, legal, and human resources functions,
as well as the business activities of Vonage America, Vonage Limited (UK) and Vonage
Canada. The Executive shall also perform such other duties as the Board may
from time to time require consistent with the general level and type of duties
and responsibilities customarily associated with such position. The officers
performing the functions supervised by the Executive shall report directly to
the Executive or his designee. Executive expressly acknowledges that the
Company’s Chairman and Chief Strategist is responsible for the Company’s
overall strategy, as well as all technology and employee culture and public
relations matters, and such other duties as the Board may from time to time
require. The Executive agrees that, to the best of his ability and experience,
he shall at all times conscientiously perform all of the duties of his position.
The Executive’s principal place of employment shall be the principal offices of
the Company, currently located in the Holmdel, New Jersey area; provided,
however, that the Executive understands and agrees that he shall be
required to travel from time to time for business reasons.

 

(b)           Exclusive
Services. For so long as the Executive is employed by the Company, the
Executive shall devote his full-time working time to his duties hereunder,
shall faithfully serve the Company, shall in all respects conform to and comply
with the lawful and good faith directions and instructions given to him by the
Board and shall use his best efforts to promote and serve the interests of the
Company. Further, the Executive shall not, directly or indirectly, render
services to any other person or organization without the consent of the Board
or otherwise engage in activities that would interfere significantly with the
faithful performance of his duties hereunder. Notwithstanding the foregoing,
the Executive may serve on (i) corporate boards, with the Board’s prior
consent, or (ii) civic or charitable boards or engage in charitable activities

 

 

without remuneration
therefore, provided that such activities do not contravene the first
sentence of this Section 1(b). Additionally, notwithstanding the foregoing, the
Executive may manage his personal investments, and serve as an executor,
trustee, or in a similar fiduciary capacity in connection therewith, provided
that such activities do not contravene the first sentence of this Section 1(b).

 

2.             Term
of Employment. The term of this Agreement (the “Term”) shall
commence as of February 27, 2006 (the “Effective Date”) and shall
terminate on the second anniversary of the Effective Date; provided, however,
that the Term shall be automatically extended without further action of either
party for additional one-year periods, unless written notice of either party’s
intention not to extend has been given to the other party at least 90 days
prior to the expiration of the then-effective Term. Notwithstanding anything to
the contrary herein, in the event of a Change of Control of the Company (as
such term is defined in the Company’s 2001 Stock Incentive Plan (as amended
through April 20, 2005) (the “Stock Incentive Plan”), as it may be
amended from time to time), the Term shall be automatically extended without
further action of either party for an additional one-year period from the date
of such Change of Control, subject to further automatic renewals as provided
above.

 

3.             Compensation
and Other Benefits. Subject to the provisions of this Agreement, the
Company shall pay and provide the following compensation and other benefits to
the Executive during the Term as compensation for services rendered hereunder:

 

(a)           Base
Salary. The Company shall pay to the Executive an annual base salary (the “Base
Salary”) at the rate of $500,000, payable in substantially equal
installments at such intervals as may be determined by the Company in
accordance with its ordinary payroll practices as applicable to senior
executives as established from time to time. The Base Salary shall be reviewed
by the Compensation Committee of the Board in good faith, based upon the
Executive’s performance, not less often than annually, but shall not be reduced
below $500,000.

 

(b)           Sign-On
Bonus. Effective as of the Effective Date, the Executive shall be granted a
one-time sign-on bonus of 2,500,000 stock options (the “Options”) to
purchase shares of the Company’s common stock at a price per share equal to the
fair market value of the common stock as of the Effective Date as determined in
good faith by the Board, pursuant to the terms of the Stock Option Plan and the
corresponding stock option agreement. Notwithstanding anything to the contrary
in the Stock Option Plan or any stock option agreement, upon the Change of
Control of the Company, all outstanding Options granted by the Company to the
Executive shall become fully vested and immediately exercisable on the date of
such Change of Control.

 

(c)           Annual
Cash Bonus. For each fiscal year during the Term, the Executive shall be
eligible to receive an annual lump sum discretionary performance-based bonus in
accordance with the Company’s annual bonus program, as applicable to senior
executives as in effect from time to time. The amount, if any, of the Executive’s
annual bonus shall be determined by the Compensation Committee of the Board. The
bonus shall be prorated for any year in which the Executive’s employment is
terminated due to:  (i) the Executive’s
resignation for Good Reason; (ii) the Company’s termination of the Executive’s
employment without Cause; or (iii) the Executive’s death or disability (as
defined in Section 4(c) below). If the Executive’s employment with the Company
is terminated by the Company for Cause or the Executive resigns

 

2

 

from his employment other
than for Good Reason prior to the end of the fiscal year for which the bonus is
payable, the Executive shall not receive any portion of such bonus.

 

(d)           Equity
Incentive Compensation. During the Term, the Executive shall be eligible to
participate in the Company’s equity compensation plans and programs generally
applicable to senior executives of the Company as in effect from time to time,
including without limitation, the Stock Incentive Plan.

 

(e)           Employee
Benefit Plans. The Executive shall be entitled to participate in all
employee welfare, pension, and fringe benefit plans, programs and arrangements
of the Company, in accordance with their respective terms, as may be amended
from time to time, and on a basis no less favorable than that made available to
other senior executives of the Company.

 

(f)            Expenses.
The Company shall reimburse the Executive for reasonable travel and other
business-related expenses incurred by the Executive in the fulfillment of his
duties hereunder upon presentation of written documentation thereof, in
accordance with the applicable expense reimbursement policies and procedures of
the Company as in effect from time to time.

 

(g)           Vacation.
The Executive shall be entitled to 20 days paid time off for each fiscal year
during the Term. If Executive does not use any portion of the allotted paid
time off in any fiscal year, Executive shall be entitled to add any and all
unused paid time off to the paid time off permitted under this Agreement for
the following fiscal year.

 

(h)           Other
Benefits and Perquisites. The Executive shall be entitled to such other
benefits and perquisites as may be available generally to other senior
executives of the Company, including reasonable temporary living, commuting and
moving expenses.

 

4.             Termination
of Employment.

 

(a)           Termination
for Cause; Resignation Without Good Reason.

 

(i)            If,
the Company terminates the Executive’s employment for Cause, or if the
Executive resigns from his employment hereunder other than for Good Reason, the
Executive shall only be entitled to payment of any unpaid Base Salary through
and including the date of termination or resignation and any other amounts or
benefits required to be paid under this Agreement or provided by law or under
any plan, program, policy or practice of the Company (the “Other Accrued
Compensation and Benefits”). The Executive shall have no further right to
receive any other compensation or benefits after such termination or
resignation of employment.

 

(ii)           For
purposes of this Agreement, “Cause” shall mean:  (A) any act or omission that constitutes a
breach by the Executive of any of his obligations under this Agreement; (B) the
willful and continued failure or refusal of the Executive (not as a consequence
of illness, accident, or other disability) to satisfactorily perform the duties
reasonably required of him as an employee of the Company; (C) the Executive’s
conviction of, or plea of nolo contendere
to, (x) any felony or (y) another crime involving dishonesty or moral turpitude
or which could reflect negatively upon the Company or otherwise impair or
impede its operations; (D) the Executive’s engaging in any misconduct,
negligence, act of dishonesty, violence or threat of violence (including any
violation of federal securities laws) that is injurious to the Company or any
of its

 

3

 

subsidiaries or affiliates (collectively, the
“Company Group”); (E) the Executive’s material breach of a written
policy of the Company or the rules of any governmental or regulatory body
applicable to the Company; (F) the diverting or usurping of a corporate
opportunity of the Company Group by the Executive; (G) the Executive’s refusal
to follow the lawful directions of the Board; or (H) the Executive’s willful
failure to comply with any of the material terms of this Agreement or any other
willful misconduct by the Executive which is materially injurious to the
financial condition or business reputation of the Company Group); provided,
however, that no event or condition described in clauses (A), (B), (E),
(G), or (H) shall constitute Cause unless (i) the Company first gives the
Executive written notice of its intention to terminate his employment for Cause
and the grounds for such termination, and (ii) such grounds for termination (if
susceptible to correction) are not corrected by the Executive within 15 days of
his receipt of such notice (or, in the event that such grounds cannot be
corrected within such 15-day period, the Executive has not taken all reasonable
steps within such 15-day period to correct such grounds as promptly as
practicable thereafter).

 

(iii)          For
purposes of this Agreement, “Good Reason” shall mean the occurrence of
any of the following events without the Executive’s prior written consent:  (A) a decrease in the Executive’s Base Salary
below $500,000, or a failure by the Company to pay material compensation due
and payable to the Executive in connection with his employment; (B) a material
diminution of the responsibilities, positions or titles of the Executive from
those set forth in this Agreement, including without limitation, ceasing to be
the chief executive officer of the Company (or its ultimate parent following a
Change of Control); (C) the Company requiring the Executive to be based at any
office or location more than 50 miles from the Holmdel, New Jersey area; (D)
the Company’s delivery of a notice of non-renewal of the Term following a
Change of Control of the Company; or (E) a material breach by the Company of
any term or provision of this Agreement; provided, however, that
no event or condition described in clauses (A) through (E) shall constitute
Good Reason unless (x) the Executive gives the Company written notice of his
intention to terminate his employment for Good Reason and the grounds for such
termination, and (y) such grounds for termination (if susceptible to
correction) are not corrected by the Company within 15 days of its receipt of
such notice (or, in the event that such grounds cannot be corrected within such
15-day period, the Company has not taken all reasonable steps within such
15-day period to correct such grounds as promptly as practicable thereafter).

 

(b)           Termination
Without Cause; Resignation for Good Reason.

 

(i)            If,
prior to the expiration of the Term, the Executive’s employment is terminated
by the Company without Cause, or if the Executive resigns from his employment
hereunder for Good Reason, the Company shall pay the Executive:  (A) a pro-rata portion of his bonus for the
year in which the termination of employment occurs on the date such bonus would
have been payable to the Executive had he remained employed by the Company; (B)
an amount equal to the Executive’s Base Salary (at the rate in effect on the
date the Executive’s employment is terminated) for a two-year period following
the Executive’s termination of employment as described in this Section 4(b),
payable in (1) substantially equal installments over the lesser of (aa) a
six-month period immediately following such termination, or (bb) such shorter
period that is the longest period permissible in order for the payments not to
be considered “nonqualified deferred compensation” under Section 409A of the
Internal Revenue Code of 1986, as amended

 

4

 

(the “Code”), or any regulations,
rulings or other regulatory guidance issued thereunder, or, if such payment
terms would not satisfy the requirements of Section 409A of the Code and the
regulations, rulings and other regulatory guidance issued thereunder, (2) a
lump sum on the date that is six months following the Executive’s “separation
from service” (within the meaning of Section 409A of the Code) occurring in
connection with such termination; and (C) the Other Accrued Compensation and
Benefits. In addition to the foregoing, if the Executive’s employment is
terminated by the Company without Cause, or if the Executive resigns from his
employment hereunder for Good Reason, the Company shall, upon the request of
the Executive, pay up to a maximum amount of $50,000 for outplacement services
for Executive, such payment to be made to an agency selected by Executive,
based on the customary fees charged by nationally rated firms engaged in such
services. The Executive shall have no further rights under this Agreement or
otherwise to receive any other compensation or benefits after such termination
or resignation of employment.

 

(ii)           The
Company shall not be required to make the payments and provide the benefits
provided for under Section 4(b)(i) (including the Other Accrued Compensation
and Benefits), unless the Executive executes and delivers to the Company, a
release in a form acceptable to the Company, and the release has become
effective and irrevocable in its entirety.

 

(iii)          If,
following a termination of employment without Cause or a resignation for Good
Reason, the Executive breaches the provisions of Section 5 or 7 hereof, the
Executive shall not be eligible, as of the date of such breach, for the payments
and benefits described in Section 4(b)(i), and any and all obligations and
agreements of the Company with respect to such payments shall thereupon cease.

 

(c)           Termination
Due to Death or Disability. The Executive’s employment with the Company
shall terminate automatically on the Executive’s death. In the event of the
Executive’s disability, the Company shall be entitled to terminate his
employment. In the event of termination of the Executive’s employment by reason
of Executive’s death or disability, the Company shall pay to the Executive (or
his estate, as applicable), (i) a pro-rata portion of the Executive’s bonus for
the year in which the termination of employment occurs on the date such bonus
would have been payable to the Executive had he remained employed by the
Company; (ii) the Executive’s Base Salary through and including the date of
termination; (iii) an amount equal to 12 months of the Executive’s Base Salary
(at the rate in effect on the date the Executive’s employment is terminated)
payable in substantially equal installments over a 12-month period; provided,
however, that if the Executive is receiving short-term or long-term
disability benefits pursuant to a Company policy, such installments shall be
reduced (but in no event to an amount below zero) by the tax-adjusted amount of
disability payments, excluding any supplemental disability benefits funded
through employee contributions, received by the Executive during the period
corresponding with each installment; and (iv) the Other Accrued Compensation
and Benefits. For purposes of this Agreement, “disability” means that
the Executive (i) is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, or (ii) is, by reason of any medically determinable
physical or mental impairment which can be expected to result in death or can
be expected to last for a continuous period of not less than 12 months,
receiving income 

 

5

 

replacement benefit for a
period of not less than three months under an accident and health plan covering
employees of the Company.

 

(d)           Notice
of Termination. Any termination of employment by the Company or the
Executive shall be communicated by a written “Notice of Termination” to
the other party hereto given in accordance with Section 21 of this Agreement. In
the event of a termination by the Company for Cause, or resignation by the
Executive for Good Reason, the Notice of Termination shall (i) indicate the
specific termination provision in this Agreement relied upon, (ii) set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated and
(iii) specify the date of termination, which date shall not be more than 30
days after the giving of such notice. The failure by the Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of the Executive or the Company, respectively, hereunder or preclude the
Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder. In
the event of a termination by the Company without Cause, or resignation by the
Executive other than for Good Reason, the Notice of Termination shall specify
the date of termination, which date shall not be less than 30 days after the
giving of such notice.

 

(e)           Resignation
from Directorships and Officerships. The termination of the Executive’s
employment for any reason shall constitute the Executive’s resignation from (i)
any director, officer, or employee position the Executive has with the Company
Group, and (ii) all fiduciary positions (including as a trustee) the Executive
holds with respect to any employee benefit plans or trusts established by the Company.
The Executive agrees that this Agreement shall serve as written notice of
resignation in this circumstance.

 

(f)            Reduction
of Payments if Reduction Would Result in Greater After-Tax Amount. Notwithstanding
anything herein to the contrary, in the event that the Executive receives any
payments or distributions, whether payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, that constitute “parachute
payments” within the meaning of Section 280G of the Code, and the net after-tax
amount of the parachute payment is less than the net after-tax amount if the
aggregate payment to be made to the Executive were three times the Executive’s “base
amount” (as defined in Section 280G(b)(3) of the Code) less $1.00, then the aggregate
of the amounts constituting the parachute payment shall be reduced to an amount
that shall equal three times the Executive’s base amount, less $1.00. The
determinations to be made with respect to this Section 4(f) shall be made by a
certified public accounting firm designated by the Company and reasonably
acceptable to the Executive.

 

5.             Confidentiality.

 

(a)           Confidential
Information. The Executive agrees to enter into and be subject to the
Company’s Employee Confidentiality and Innovations Agreement substantially in
the form attached hereto as Exhibit A.

 

(b)           Exclusive
Property. The Executive confirms that all Confidential Information (as
defined in the Employee Confidentiality and Innovations Agreement) is and shall
remain the

 

6

 

exclusive property of the
Company Group. All business records, papers and documents kept or made by the
Executive relating to the business of the Company Group shall be and remain the
property of the Company Group. Upon the request and at the expense of the
Company Group, the Executive shall promptly make all disclosures, execute all
instruments and papers, and perform all acts reasonably necessary to vest and
confirm in the Company Group, fully and completely, all rights created or
contemplated by this Section 5(b).

 

6.             Noncompetition.
The Executive agrees to enter into and be subject to the Company’s Noncompete
Agreement substantially in the form attached as Exhibit B.

 

7.             Non-Solicitation.
The Executive agrees that for a period commencing on the Effective Date and
ending 12 months following the Executive’s termination of employment with the
Company (the “Restricted Period”), the Executive shall not, directly or
indirectly:  (a) interfere with or
attempt to interfere with the relationship between any person who is, or was
during the then-most recent 12-month period, an employee, officer,
representative or agent of the Company Group, or solicit, induce or attempt to
solicit or induce any of them to leave the employ of any member of the Company
Group or violate the terms of their respective contracts, or any employment
arrangements, with such entities; or (b) induce or attempt to induce any
customer, client, supplier, licensee or other business relation of any member
of the Company Group to cease doing business with any member of the Company
Group, or in any way interfere with the relationship between any member of the
Company Group and any customer, client, supplier, licensee or other business
relation of any member of the Company Group. As used herein, the term “indirectly”
shall include, without limitation, the Executive’s permitting the use of the
Executive’s name by any competitor of any member of the Company Group to induce
or interfere with any employee or business relationship of any member of the
Company Group.

 

8.             Certain
Remedies.

 

(a)           Injunctive
Relief. Without intending to limit the remedies available to the Company
Group, including, but not limited to, those set forth in Section 12 hereof, the
Executive agrees that a breach of any of the covenants contained in Sections 5
through 7 of this Agreement may result in material and irreparable injury to
the Company Group for which there is no adequate remedy at law, that it shall
not be possible to measure damages for such injuries precisely and that, in the
event of such a breach or threat thereof, any member of the Company Group shall
be entitled to seek a temporary restraining order or a preliminary or permanent
injunction, or both, without bond or other security, restraining the Executive
from engaging in activities prohibited by the covenants contained in Sections 5
through 7 of this Agreement or such other relief as may be required
specifically to enforce any of the covenants contained in this Agreement. Such
injunctive relief in any court shall be available to the Company Group in lieu
of, or prior to or pending determination in, any arbitration proceeding.

 

(b)           Extension
of Restricted Period. In addition to the remedies the Company may seek and
obtain pursuant to Section 12, the Restricted Period shall be extended by any
and all periods during which the Executive shall be found by a court possessing
personal jurisdiction over him to have been in violation of the covenants
contained in Sections 5 through 7 of this Agreement.

 

7

 

9.             Defense
of Claims. The Executive agrees that, during the Term, and for a period of
six months after termination of the Executive’s employment, upon request from
the Company, the Executive shall cooperate with the Company in connection with
any matters the Executive worked on during his employment with the Company and
any related transitional matters. In addition, the Executive agrees to
cooperate with the Company in the defense of any claims or actions that may be
made by or against the Company Group that affect the Executive’s prior areas of
responsibility, except if the Executive’s reasonable interests are adverse to
the Company Group in such claim or action. The Company agrees to promptly
reimburse the Executive for all of the Executive’s reasonable travel and other
direct expenses incurred, or to be reasonably incurred, to comply with the
Executive’s obligations under this Section 9.

 

10.           Nondisparagement.
The Executive agrees to refrain from (i) making, directly or indirectly, any
derogatory comments concerning the Company Group or any current or former
officers, directors, employees or shareholders thereof or (ii) taking any other
action with respect to the Company Group which is reasonably expected to
result, or does result in, damage to the business or reputation of the Company
Group or any of its current or former officers, directors, employees or
shareholders. Notwithstanding anything to the contrary contained herein,
nothing in this Agreement shall prohibit or restrict the Executive from,
truthfully and in good faith: 
(i) making any disclosure of information required by law; (ii)
providing information to, or testifying or otherwise assisting in any investigation
or proceeding brought by, any federal regulatory or law enforcement agency or
legislative body, any self-regulatory organization, or the Company’s designated
legal, compliance or human resources officers; or (iii) filing, testifying,
participating in or otherwise assisting in a proceeding relating to an alleged
violation of any federal, state or municipal law relating to fraud, or any rule
or regulation of the Securities and Exchange Commission or any self-regulatory
organization.

 

11.           Source
of Payments. All payments provided under this Agreement, other than
payments made pursuant to a plan which provides otherwise, shall be paid in
cash from the general funds of the Company, and no special or separate fund
shall be established, and no other segregation of assets shall be made, to
assure payment. The Executive shall have no right, title or interest whatsoever
in or to any investments which the Company may make to aid the Company in
meeting its obligations hereunder. To the extent that any person acquires a
right to receive payments from the Company hereunder, such right shall be no
greater than the right of an unsecured creditor of the Company.

 

12.           Arbitration.
Any dispute or controversy arising under or in connection with this Agreement
or otherwise in connection with the Executive’s employment by the Company that
cannot be mutually resolved by the parties to this Agreement and their
respective advisors and representatives shall be settled exclusively by
arbitration in New Jersey in accordance with the rules of the American
Arbitration Association before one arbitrator of exemplary qualifications and
stature, who shall be selected jointly by an individual to be designated by the
Company and an individual to be selected by the Executive, or if such two
individuals cannot promptly agree on the selection of the arbitrator, who shall
be selected by the American Arbitration Association. Notwithstanding anything
to the contrary contained herein, the arbitrator shall allow for discovery
sufficient to adequately arbitrate any claims, including access to essential
documents and witnesses. The award of the arbitrator with respect to such
dispute or controversy shall be in writing with sufficient explanation to allow
for such meaningful judicial review as is permitted

 

8

 

by law, and that such
decision shall be enforceable in any court of competent jurisdiction and shall
be binding on the parties hereto. The remedies available in arbitration shall
be identical to those allowed at law. The arbitrator shall be entitled to award
to the prevailing party in any arbitration or judicial action under this
Agreement reasonable attorneys’ fees and any costs of the arbitration payable
by such party, consistent with applicable law. The Company and the Executive
each shall pay its or his own attorneys’ fees and costs in any such arbitration
and shall each pay one-half of the arbitrators’ fees and any other costs of
such arbitration.

 

13.           Nonassignability:
Binding Agreement.

 

(a)           By
the Executive. This Agreement and any and all of the Executive’s rights,
duties, obligations or interests hereunder shall not be assignable or delegable
by the Executive.

 

(b)           By
the Company. This Agreement and any and all of the Company’s rights,
duties, obligations or interests hereunder shall not be assignable by the
Company, except as incident to a reorganization, merger or consolidation, or
transfer of all or substantially all of the Company’s assets.

 

(c)           Binding
Effect. This Agreement shall be binding upon, and inure to the benefit of,
the parties hereto, any successors to or permitted assigns of the Company, and
the Executive’s heirs and the personal representatives of the Executive’s
estate.

 

14.           Withholding.
Any payments made or benefits provided to the Executive under this Agreement
shall be reduced by any applicable withholding taxes or other amounts required
to be withheld by law or contract.

 

15.           Amendment;
Waiver. This Agreement may not be modified, amended or waived in any
manner, except by an instrument in writing signed by both parties hereto. The
waiver by either party of compliance with any provision of this Agreement by
the other party shall not operate or be construed as a waiver of any other
provision of this Agreement, or of any subsequent breach by such party of a
provision of this Agreement.

 

16.           Governing
Law. All matters affecting this Agreement, including the validity thereof,
are to be governed by, and interpreted and construed in accordance with, the
laws of the State of New Jersey applicable to contracts executed in and to be
performed in that State.

 

17.           Survival
of Certain Provisions. The rights and obligations set forth in Sections
4(b) and 4 (c) and Sections 5 through 12 hereof shall survive any termination
or expiration of this Agreement.

 

18.           Entire
Agreement; Supersedes Previous Agreements. This Agreement, together with
the (i) Employee Confidentiality and Innovations Agreement, and (ii) Noncompete
Agreement, contains the entire agreement and understanding of the parties
hereto with respect to the matters covered herein and supersedes all prior or
contemporaneous negotiations, commitments, agreements and writings with respect
to the subject matter hereof, all such other negotiations, commitments,
agreements and writings shall have no further force or effect, and the parties
to any such other negotiation, commitment, agreement or writing shall have no
further rights or obligations thereunder.

 

9

 

19.           Counterparts.
This Agreement may be executed by either of the parties hereto in counterparts,
each of which shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.

 

20.           Headings.
The headings of sections herein are included solely for convenience of
reference and shall not control the meaning or interpretation of any of the
provisions of this Agreement.

 

21.           Notices.
All notices or communications hereunder shall be in writing, addressed as
follows:

 

To the Company:

 

23 Main Street 

Holmdel, N.J. 07722 

Attention:  Chief Legal Officer

 

To the Executive:

 

Michael Snyder 

1130 Cocoanut Road

Boca Raton, Florida 33432 or the Executive’s last address on record with the
Company

 

All such notices shall be
conclusively deemed to be received and shall be effective (i) if sent by hand
delivery, upon receipt, or (ii) if sent by electronic mail or facsimile, upon
confirmation of receipt by the sender of such transmission, or (iii) if sent by
courier or certified or registered U.S. mail, upon receipt.

 

22.           Severability.
In the event that any court having jurisdiction shall determine that any
restrictive covenant or other provision contained in this Agreement shall be
unreasonable or unenforceable in any respect, then such covenant or other
provision shall be deemed limited to the extent that such other court deems it
reasonable or enforceable, and as so limited shall remain in full force and
effect. In the event that such court shall deem any such covenant or other
provision wholly unenforceable, the remaining covenants and other provisions of
this Agreement shall nevertheless remain in full force and effect.

 

10

 

IN WITNESS WHEREOF, the
Company has caused this Agreement to be signed by its officer pursuant to the
authority of its Board, and the Executive has executed this Agreement, as of
the day and year first written above.

 

 

	
   

  	
  VONAGE HOLDINGS CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Jeffrey Citron

  	
   

  
	
   

  	
   

  	
  Name: Jeffrey Citron

  
	
   

  	
   

  	
  Title: Chairman of the
  Board and Chief

  Strategist

  
	
   

  
	
   

  
	
  ACCEPTED AND AGREED:

  
	
   

  
	
    /s/ Michael Snyder

  	
   

  
	
  Michael Snyder

  	
   

  
	
   

  
	
  Dated:

  	
  3-30-06

  	
   

  
						

 

11

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