Document:

10.1-ALPHONSO LABS EQUITY INCENTIVE PLAN

EXHIBIT 10.1
ALPHONSO LABS INC.
2010 EQUITY INCENTIVE PLAN
As Adopted on April 21, 2010
1.PURPOSE.  The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, its Parent and Subsidiaries by offering eligible persons an opportunity to participate in the Company’s future performance through awards of Options and Restricted Stock.  Capitalized terms not defined in the text are defined in Section 22 hereof.  Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, grants may be made pursuant to this Plan that do not qualify for exemption under Rule 701 or Section 25102(o) of the California Corporations Code (“Section 25102(o)”).  Any requirement of this Plan that is required in law only because of Section 25102(o) need not apply if the Committee so provides.
2.SHARES SUBJECT TO THE PLAN.
2.1    Number of Shares Available.  Subject to Sections 2.2 and 17 hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan will be 500,000 Shares.  Subject to Sections 2.2, 5.10 and 17 hereof, Shares subject to Awards previously granted will again be available for grant and issuance in connection with future Awards under this Plan to the extent such Shares:  (i) cease to be subject to issuance upon exercise of an Option, other than due to exercise of such Option; (ii) are subject to an Award granted hereunder but the Shares subject to such Award are forfeited or repurchased by the Company at the original issue price; or (iii) are subject to an Award that otherwise terminates without Shares being issued.  At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all Awards granted and outstanding under this Plan.
2.2    Adjustment of Shares.  In the event that the number of outstanding shares of the Company’s Common Stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise Prices of and number of Shares subject to outstanding Options and (c) the Purchase Prices of and number of Shares subject to other outstanding Awards will be 

proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided, however, that fractions of a Share will not be issued but will either be paid in cash at the Fair Market Value of such fraction of a Share or will be rounded down to the nearest whole Share, as determined by the Committee; and provided, further, that the Exercise Price of any Option may not be decreased to below the par value of the Shares.
3.ELIGIBILITY.  ISOs (as defined in Section 5 hereof) may be granted only to employees (including officers and directors who are also employees) of the Company or of a Parent or Subsidiary of the Company.  NQSOs (as defined in Section 5 hereof) and Restricted Stock Awards may be granted to employees, officers, directors and consultants of the Company or any Parent or Subsidiary of the Company; provided such consultants render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction.  A person may be granted more than one Award under this Plan.
4.ADMINISTRATION.
4.1    Committee Authority.  This Plan will be administered by the Committee or the Board if no Committee is created by the Board.  Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan.  Without limitation, the Committee will have the authority to:
(a)    construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;
(b)    prescribe, amend, expand and rescind or terminate rules and regulations relating to this Plan;
(c)    approve persons to receive Awards;
(d)    determine the form and terms of Awards;
(e)    determine the number of Shares or other consideration subject to Awards under this Plan;
(f)    determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or awards under any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;
(g)    grant waivers of any conditions of this Plan or any Award;

(h)    determine the terms of vesting, exercisability and payment of Awards under this Plan;
(i)    correct any defect, supply any omission, or reconcile any inconsistency in this Plan, any Award, any Award Agreement, any Exercise Agreement or any Restricted Stock Purchase Agreement;
(j)    determine whether an Award has been earned; 
(k)    make all other determinations necessary or advisable for the administration of this Plan; and
(l)    extend the vesting period beyond a Participant’s Termination Date.
4.2    Committee Discretion.  Unless in contravention of any express terms of this Plan or Award, any determination made by the Committee with respect to any Award will be made in its sole discretion either (a) at the time of grant of the Award, or (b) subject to Section 5.9 hereof, at any later time.  Any such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan.  The Committee may delegate to one or more officers of the Company the authority to grant an Award under this Plan, provided such officer or officers are members of the Board.
5.OPTIONS.  The Committee may grant Options to eligible persons described in Section 3 hereof and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (“ISOs”) or Nonqualified Stock Options (“NQSOs”), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:
5.1    Form of Option Grant.  Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO (“Stock Option Agreement”), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan.
5.2    Date of Grant.  The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless a later date is otherwise specified by the Committee.  The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.
5.3    Exercise Period.  Options may be exercisable immediately but subject to repurchase pursuant to Section 11 hereof or may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock Option Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from 

the date the Option is granted; and provided further that no ISO granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary (“Ten Percent Shareholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted.  The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.  
5.4    Exercise Price.  The Exercise Price of an Option will be determined by the Committee when the Option is granted and shall not be less than the Fair Market Value per Share unless expressly determined in writing by the Committee on the Option’s date of grant; provided that the Exercise Price of an ISO granted to a Ten Percent Shareholder will not be less than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant.  Payment for the Shares purchased must be made in accordance with Section 7 hereof.
5.5    Method of Exercise.  Options may be exercised only by delivery to the Company of a written stock option exercise agreement (the “Exercise Agreement”) in a form approved by the Committee (which need not be the same for each Participant).  The Exercise Agreement will state (a) the number of Shares being purchased, (b) the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and (c) such representations and agreements regarding Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws.  Participant shall execute and deliver to the Company the Exercise Agreement together with payment in full of the Exercise Price, and any applicable taxes, for the number of Shares being purchased.
5.6    Termination.  Subject to earlier termination pursuant to Sections 17 and 18 hereof and notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following:
(a)    If the Participant is Terminated for any reason other than death, Disability or for Cause, then the Participant may exercise such Participant’s Options only to the extent that such Options are exercisable as to Vested Shares upon the Termination Date or as otherwise determined by the Committee.  Such Options must be exercised by the Participant, if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be an NQSO) but in any event, no later than the expiration date of the Options.
(b)    If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause), 

then Participant’s Options may be exercised only to the extent that such Options are exercisable as to Vested Shares by Participant on the Termination Date or as otherwise determined by the Committee.  Such options must be exercised by Participant (or Participant’s legal representative or authorized assignee), if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such shorter time period, not less than six (6) months, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee, with any exercise beyond (i) three (3) months after the Termination Date when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code, or (ii) twelve (12) months after the Termination Date when the Termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, deemed to be an NQSO) but in any event no later than the expiration date of the Options.
(c)    If the Participant is terminated for Cause, the Participant may exercise such Participant’s Options, but not to an extent greater than such Options are exercisable as to Vested Shares upon the Termination Date and Participant’s Options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as are determined by the Committee.
5.7    Limitations on Exercise.  The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent Participant from exercising the Option for the full number of Shares for which it is then exercisable.
5.8    Limitations on ISOs.  The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) will not exceed One Hundred Thousand Dollars ($100,000).  If the Fair Market Value of Shares on the date of grant with respect to which ISOs are exercisable for the first time by a Participant during any calendar year exceeds One Hundred Thousand Dollars ($100,000), then the Options for the first One Hundred Thousand Dollars ($100,000) worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the amount in excess of One Hundred Thousand Dollars ($100,000) that become exercisable in that calendar year will be NQSOs.  In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date (as defined in Section 18 hereof) to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, then such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.
5.9    Modification, Extension or Renewal.  The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of 

such Participant’s rights under any Option previously granted.  Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code.  Subject to Section 5.10 hereof, the Committee may reduce the Exercise Price of outstanding Options without the consent of Participants by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 5.4 hereof for Options granted on the date the action is taken to reduce the Exercise Price; provided, further, that the Exercise Price will not be reduced below the par value of the Shares, if any.
5.10    No Disqualification.  Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant, to disqualify any Participant’s ISO under Section 422 of the Code.  In no event shall the total number of Shares issued (counting each reissuance of a Share that was previously issued and then forfeited or repurchased by the Company as a separate issuance) under the Plan upon exercise of ISOs exceed 5,000,000 Shares (adjusted in proportion to any adjustments under Section 2.2 hereof) over the term of the Plan.
6.RESTRICTED STOCK.  A Restricted Stock Award is an offer by the Company to sell to an eligible person Shares that are subject to certain specified restrictions.  The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the restrictions to which the Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the following:
6.1    Form of Restricted Stock Award.  All purchases under a Restricted Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.  The Restricted Stock Award will be accepted by the Participant’s execution and delivery of the Restricted Stock Purchase Agreement and full payment for the Shares to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is delivered to the person.  If such person does not execute and deliver the Restricted Stock Purchase Agreement along with full payment for the Shares to the Company within such thirty (30) days, then the offer will terminate, unless otherwise determined by the Committee.
6.2    Purchase Price.  The Purchase Price of Shares sold pursuant to a Restricted Stock Award will be determined by the Committee on the date the Restricted Stock Award is granted or at the time the purchase is consummated.  Payment of the Purchase Price must be made in accordance with Section 7 hereof.

6.3    Restrictions.  Restricted Stock Awards may be subject to the restrictions set forth in Section 11 hereof or such other restrictions not inconsistent with Section 25102(o) of the California Corporations Code.
7.PAYMENT FOR SHARE PURCHASES.
7.1    Payment.  Payment for Shares purchased pursuant to this Plan may be made in cash (by check) or, where expressly approved for the Participant by the Committee and where permitted by law:
(a)    by cancellation of indebtedness of the Company owed to the Participant;
(b)    by surrender of shares of the Company that: (i) either (A) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (B) were obtained by Participant in the public market and (ii) are clear of all liens, claims, encumbrances or security interests;
(c)    by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient to avoid imputation of income under Sections 483 and 1274 of the Code; provided, however, that Participants who are not employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares; provided, further, that the portion of the Exercise Price or Purchase Price, as the case may be, equal to the par value of the Shares must be paid in cash or other legal consideration permitted by Delaware General Corporation Law;
(d)    by waiver of compensation due or accrued to the Participant from the Company for services rendered;
(e)    with respect only to purchases upon exercise of an Option, and provided that a public market for the Company’s stock exists:
(i)    through a “same day sale” commitment from the Participant and a Company-designated broker-dealer that is a member of a financial industry regulatory authority, such as the New York Stock Exchange (a “Dealer”), whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay the total Exercise Price, and whereby the Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company; or

(ii)    through a “margin” commitment from the Participant and a Dealer whereby the Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the Dealer in a margin account as security for a loan from the Dealer in the amount of the total Exercise Price, and whereby the Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company; or
(f)    by any combination of the foregoing.
7.2    Loan Guarantees.  The Committee may, in its sole discretion, elect to assist the Participant in paying for Shares purchased under this Plan by authorizing a guarantee by the Company of a third-party loan to the Participant.
8.WITHHOLDING TAXES.
8.1    Withholding Generally.  Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares.  Whenever, under this Plan, payments in satisfaction of Awards are to be made in cash by the Company, such payment will be net of an amount sufficient to satisfy federal, state, and local withholding tax requirements.
8.2    Stock Withholding.  When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may in its sole discretion allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from the Shares to be issued that minimum number of Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined; but in no event will the Company withhold Shares if such withholding would result in adverse accounting consequences to the Company.  All elections by a Participant to have Shares withheld for this purpose will be made in accordance with the requirements established by the Committee for such elections and be in writing in a form acceptable to the Committee.
9.PRIVILEGES OF STOCK OWNERSHIP.  No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant.  After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change 

in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock.  The Participant will have no right to retain such stock dividends or stock distributions with respect to Unvested Shares that are repurchased pursuant to Section 11 hereof.  
10.TRANSFERABILITY.  Except as permitted by the Committee, Awards granted under this Plan, and any interest therein, will not be transferable or assignable by Participant, other than by will or by the laws of descent and distribution, and, with respect to NQSOs, by instrument to an inter vivos or testamentary trust in which the options are to be passed to beneficiaries upon the death of the trustor (settlor), or by gift to “immediate family” as that term is defined in 17 C.F.R. 240.16a‐1(e), and may not be made subject to execution, attachment or similar process.  During the lifetime of the Participant an Award will be exercisable only by the Participant or Participant’s legal representative and any elections with respect to an Award may be made only by the Participant or Participant’s legal representative.
11.RESTRICTIONS ON SHARES.
11.1    Right of First Refusal.  At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement a right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, provided that such right of first refusal terminates upon the Company’s initial public offering of Common Stock pursuant to an effective registration statement filed under the Securities Act.
11.2    Right of Repurchase.  At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement a right to repurchase Unvested Shares held by a Participant for cash and/or cancellation of purchase money indebtedness owed to the Company by the Participant following such Participant’s Termination at any time.
12.CERTIFICATES.  All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.
13.ESCROW; PLEDGE OF SHARES.  To enforce any restrictions on a Participant’s Shares set forth in Section 11 hereof, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated.  The Committee may cause a legend or legends referencing such restrictions to be placed on the certificates.  Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or 

part of the Shares so purchased as collateral to secure the payment of Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral.  In connection with any pledge of the Shares, Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve.  The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.
14.EXCHANGE AND BUYOUT OF AWARDS.  The Committee may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards.  The Committee may at any time buy from a Participant an Award previously granted with payment in cash, shares of Common Stock of the Company (including Restricted Stock) or other consideration, based on such terms and conditions as the Committee and the Participant may agree.
15.SECURITIES LAW AND OTHER REGULATORY COMPLIANCE.  Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, grants may be made pursuant to this plan that do not qualify for exemption under Rule 701 or Section 25102(o) of the California Corporations Code.  Any requirement of this Plan which is required in law only because of Section 25102(o) need not apply with respect to a particular Award if the Committee so provides.  An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance.  Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable, and/or (b) compliance with any exemption, completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable.  The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the exemption, registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.
16.NO OBLIGATION TO EMPLOY.  Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary or 

limit in any way the right of the Company or any Parent or Subsidiary to terminate Participant’s employment or other relationship at any time, with or without Cause.

17.CORPORATE TRANSACTIONS.
17.1    Assumption or Replacement of Awards by Successor or Acquiring Company.  In the event of (a) a dissolution or liquidation of the Company, (b) any reorganization, consolidation, merger or similar transaction or series of related transactions (each, a "combination transaction") in which the Company is a constituent corporation or is a party if, as a result of such combination transaction, the voting securities of the Company that are outstanding immediately prior to the consummation of such combination transaction (other than any such securities that are held by an Acquiring Stockholder (defined below)) do not represent, or are not converted into, securities of the surviving corporation of such combination transaction (or such surviving corporation's parent corporation if the surviving corporation is owned by the parent corporation) that, immediately after the consummation of such combination transaction, together possess at least fifty percent (50%) of the total voting power of all securities of such surviving corporation (or its parent corporation, if applicable) that are outstanding immediately after the consummation of such combination transaction, including securities of such surviving corporation (or its parent corporation, if applicable) that are held by the Acquiring Stockholder; or (c) a sale of all or substantially all of the assets of the Company, that is followed by the distribution of the proceeds to the Company's stockholders, any or all outstanding Awards may be assumed, converted or replaced by the successor or acquiring corporation (if any), which assumption, conversion or replacement will be binding on all Participants.  In the alternative, the successor or acquiring corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders of the Company (after taking into account the existing provisions of the Awards).  The successor or acquiring corporation may also substitute by issuing, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions and other provisions no less favorable to the Participant than those which applied to such outstanding Shares immediately prior to such transaction described in this Section 17.1.  For purposes of this Section 17.1, an “Acquiring Stockholder ” means a stockholder or stockholders of the Company that (i) merges or combines with the Company in such combination transaction or (ii) owns or controls a majority of another corporation that merges or combines with the Company in such combination transaction.  In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a transaction described in this Section 17.1, then notwithstanding any other provision in this Plan to the contrary, such Awards will expire on such transaction at such time and on such conditions as the Board will determine.    
17.2    Other Treatment of Awards.  Subject to any greater rights granted to Participants under the foregoing provisions of this Section 17, in the event of the occurrence of any transaction described in Section 17.1 hereof, any outstanding Awards will be treated as provided in the applicable agreement or plan of reorganization, merger, consolidation, dissolution, liquidation or sale of assets.

17.3    Assumption of Awards by the Company.  The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (a) granting an Award under this Plan in substitution of such other company’s award or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan.  Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant.  In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the exercise price and the number and nature of shares issuable upon exercise of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code).  In the event the Company elects to grant a new Option rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price.
18.ADOPTION AND STOCKHOLDER APPROVAL.  This Plan will become effective on the date that it is adopted by the Board (the “Effective Date”).  This Plan will be approved by the stockholders of the Company (excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve (12) months before or after the Effective Date.  Upon the Effective Date, the Board may grant Awards pursuant to this Plan; provided, however, that:  (a) no Option may be exercised prior to initial stockholder approval of this Plan; (b) no Option granted pursuant to an increase in the number of Shares approved by the Board shall be exercised prior to the time such increase has been approved by the stockholders of the Company; (c) in the event that initial stockholder approval is not obtained within the time period provided herein, all Awards  for which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply shall be canceled, any Shares issued pursuant to any such Award shall be canceled and any purchase of such Shares issued hereunder shall be rescinded; and (d) Awards (to which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply) granted pursuant to an increase in the number of Shares approved by the Board which increase is not approved by stockholders within the time then required under Section 25102(o) shall be canceled, any Shares issued pursuant to any such Awards shall be canceled, and any purchase of Shares subject to any such Award shall be rescinded.
19.TERM OF PLAN/GOVERNING LAW.  Unless earlier terminated as provided herein, this Plan will terminate ten (10) years from the Effective Date or, if earlier, the date of stockholder approval.  This Plan and all agreements hereunder shall be governed by and construed in accordance with the laws of the State of California.
20.AMENDMENT OR TERMINATION OF PLAN.  Subject to Section 5.9 hereof, the Board may at any time terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; 

provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval pursuant to Section 25102(o) of the California Corporations Code or the Code or the regulations promulgated thereunder as such provisions apply to ISO plans.
21.NONEXCLUSIVITY OF THE PLAN.  Neither the adoption of this Plan by the Board, the submission of this Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options and other equity awards otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
22.DEFINITIONS.  As used in this Plan, the following terms will have the following meanings:
“Award” means any award under this Plan, including any Option or Restricted Stock Award.
“Award Agreement” means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award, including the Stock Option Agreement and Restricted Stock Agreement.
“Board” means the Board of Directors of the Company.
“Cause” means Termination because of (a) any willful, material violation by the Participant of any law or regulation applicable to the business of the Company or a Parent or Subsidiary of the Company, the Participant’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, or any willful perpetration by the Participant of a common law fraud, (b) the Participant’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company, (c) any material breach by the Participant of any provision of any agreement or understanding between the Company or any Parent or Subsidiary of the Company and the Participant regarding the terms of the Participant’s service as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company, including without limitation, the willful and continued failure or refusal of the Participant to perform the material duties required of such Participant as an employee, officer, director or consultant of the Company or a Parent or Subsidiary of the Company, other than as a result of having a Disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company or a Parent or Subsidiary of the Company and the Participant, (d) Participant’s disregard of the policies of the Company or any Parent or Subsidiary of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company or a Parent or Subsidiary of the Company, or (e) any other misconduct by the Participant which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or a Parent or Subsidiary of the Company.
“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the committee created and appointed by the Board to administer this Plan, or if no committee is created and appointed, the Board.
“Company” means Alphonso Labs Inc., or any successor corporation.
“Disability” means a disability, whether temporary or permanent, partial or total, as determined by the Committee.
“Exercise Price” means the price per Share at which a holder of an Option may purchase Shares issuable upon exercise of the Option.
“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:
(a)    if such Common Stock is then publicly traded on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal;
(b)    if such Common Stock is publicly traded but is not listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported by The Wall Street Journal (or, if not so reported, as otherwise reported by any newspaper or other source as the Committee may determine); or
(c)    if none of the foregoing is applicable to the valuation in question, by the Committee in good faith.
“Option” means an award of an option to purchase Shares pursuant to Section 5 of this Plan.
“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock representing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“Participant” means a person who receives an Award under this Plan.
“Plan” means this Alphonso Labs Inc. 2010 Equity Incentive Plan, as amended from time to time.
“Purchase Price” means the price at which a Participant may purchase Restricted Stock in connection with this Plan.
“Restricted Stock” means Shares purchased pursuant to a Restricted Stock Award under this Plan.

“Restricted Stock Award” means an award of Shares pursuant to Section 6 hereof.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” means shares of the Company’s Common Stock, $0.0001 par value, reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and 17 hereof, and any successor security.
“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock representing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company.  A Participant will not be deemed to have ceased to provide services in the case of sick leave, military leave, or any other leave of absence approved by the Committee; provided that such leave is for a period of not more than ninety (90) days (a) unless reinstatement (or, in the case of an employee with an ISO, reemployment) upon the expiration of such leave is guaranteed by contract or statute, or (b) unless provided otherwise pursuant to formal policy adopted from time to time by the Company’s Board and issued and promulgated in writing.  In the case of any Participant on sick leave, military leave or an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Option be exercised after the expiration of the term set forth in the Stock Option Agreement.  The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).
“Unvested Shares” means “Unvested Shares” as defined in the Award Agreement for an Award.
“Vested Shares” means “Vested Shares” as defined in the Award Agreement.
____________________________Exhibit 101 Vonage_AmendmentNo1toCreditAgreement

EXHIBIT 10.1 

EXECUTION COPY
AMENDMENT NO. 1
Dated as of February 11, 2013
to
CREDIT AGREEMENT
Dated as of July 29, 2011
THIS AMENDMENT NO. 1 (this “Amendment”) is made as of February 11, 2013 by and among Vonage America Inc., a Delaware corporation (“Vonage America”), Vonage Holdings Corp., a Delaware corporation (“Holdings” and, together with Vonage America, the “Borrowers”), the financial institutions listed on the signature pages hereof and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent’), under that certain Credit Agreement dated as of July 29, 2011 by and among the Borrowers, the Lenders and the Administrative Agent (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.
WHEREAS, the Borrowers have requested that the requisite Lenders and the Administrative Agent agree to make additional term loans under and make certain amendments to the Credit Agreement;
WHEREAS, the Borrowers, the Lenders party hereto and the Administrative Agent have so agreed on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrowers, the Lenders party hereto and the Administrative Agent hereby agree to enter into this Amendment.
1.Amendments to the Credit Agreement.  Effective as of the Amendment No. 1 Effective Date (as defined below), the parties hereto agree that the Credit Agreement shall be amended as follows:
(a)    The definition of “Applicable Rate” appearing in Section 1.01 of the Credit Agreement is amended to (i) delete the phrase “applicable on such date” appearing therein and to replace such phrase with “determined on the last day of the most recently completed Measurement Period in respect of which Financials have been delivered pursuant to Section 5.01” and (ii) amend and restate the pricing grid appearing therein and clause (iii) thereof in their entirety to read as follows, respectively:

7254722v.10

	
					
	 
	Consolidated Leverage Ratio:
	Eurocurrency Spread
	ABR Spread
	Commitment Fee Rate

	Category 1:
	< 0.75 to 1.00
	3.125%
	2.125%
	0.45%

	Category 2:
	≥ 0.75 to 1.00 but < 1.50 to 1.00
	3.375%
	2.375%
	0.45%

	Category 3:
	> 1.50 to 1.00 
	3.625%
	2.625%
	0.45%

(iii) notwithstanding the foregoing, Category 1 shall be deemed to be applicable from and after the Amendment No. 1 Effective Date until the Administrative Agent’s receipt of the applicable Financials for Holdings’ first fiscal quarter ending after the Amendment No. 1 Effective Date (unless such Financials demonstrate that Category 2 or 3 should have been applicable during such period, in which case such other Category shall be deemed to be applicable during such period) and adjustments to the Category then in effect shall thereafter be effected in accordance with the preceding paragraphs.
(b)    The definition of “Audited Financial Statements” appearing in Section 1.01 of the Credit Agreement is amended to delete the year “2010” appearing therein and to replace such year with “2011”.
(c)    The definition of “Consolidated EBITDA” appearing in Section 1.01 of the Credit Agreement is amended to (i) delete the word “subsidiaries” in each place that it appears in clause (f) thereof and to replace each such word with “Subsidiaries” and (ii) delete the phrase “or the Silver Point Refinancing” appearing in clause (h) thereof.
(d)    The definition of “Fixed Charge Coverage Ratio” appearing in Section 1.01 of the Credit Agreement is amended to (i) delete the phrase “Restricted Payments” appearing therein and to replace such phrase with “cash Restricted Payments made on or after the Amendment No. 1 Effective Date (other than Specified Restricted Payments in an aggregate amount not to exceed $50,000,000 during any consecutive twelve-month period beginning as of the Amendment No. 1 Effective Date)” and (ii) add the parenthetical “(it being understood for the avoidance of doubt that the obligation to repay outstanding amounts under a revolving credit facility at the maturity thereof shall not constitute an amortization payment)” immediately following the phrase “principal amount of Indebtedness” appearing in clause (b) thereof.
(e)    The definition of “Guaranty” appearing in Section 1.01 of the Credit Agreement is amended to delete the reference to “Section 5.09” appearing therein and to replace such reference with “Section 5.12”.
(f)    The definition of “Permitted Qualifying Indebtedness” appearing in Section 1.01 of the Credit Agreement is amended to (i) add the phrase “(A) ” prior to the phrase “the Consolidated Leverage Ratio” appearing therein and (ii) add the phrase “ or (B) solely in connection with any acquisition permitted pursuant to Section 6.3(g), the Consolidated Leverage Ratio does not exceed 1.35 to 1.00 and the aggregate amount of unrestricted and unencumbered cash and Cash Equivalents of Holdings and its Subsidiaries is at least $35,000,000” immediately following the phrase “does not exceed 1.25 to 1.00” appearing therein.
(g)    The definition of “Revolving Commitment” appearing in Section 1.01 of the Credit Agreement is amended to delete the final sentence thereof and to replace such sentence with “As of the 

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Amendment No. 1 Effective Date, the aggregate amount of the Revolving Lenders’ Revolving Commitments is $75,000,000.”
(h)    The definition of “Term Loan Commitment” appearing in Section 1.01 of the Credit Agreement is amended to delete the phrase “shall be $85,000,000 on the date of this Agreement” appearing therein and to replace such phrase with “was $85,000,000 on the Effective Date”.
(i)    Section 1.01 of the Credit Agreement is amended to add the following definitions thereto in the appropriate alphabetical order and, where applicable, replace the corresponding previously existing definitions:
“Additional Term Loan Commitment” means (a) as to any Term Lender, the aggregate commitment of such Term Lender to make Additional Term Loans as set forth on Schedule 2.01 or in the most recent Assignment Agreement or other documentation contemplated hereby executed by such Term Lender and (b) as to all Term Lenders, the aggregate commitment of all Term Lenders to make Additional Term Loans, which aggregate commitment was $27,499,998.00 on the Amendment No. 1 Effective Date.  After advancing the Additional Term Loan, each reference to a Term Lender’s Additional Term Loan Commitment shall refer to that Term Lender’s Applicable Percentage of the Additional Term Loans.
“Additional Term Loans” means the term loans made by certain of the Term Lenders to the Borrowers on the Amendment No. 1 Effective Date pursuant to Section 2.01.
“Amendment No. 1 Effective Date” means February 11, 2013.
“Documentation Agent” means KeyBank National Association in its capacity as documentation agent for the credit facility evidenced by this Agreement.
“Effective Date” means July 29, 2011.
“Excluded Taxes” means, with respect to any payment made by any Loan Party under any Loan Document, any of the following Taxes imposed on or with respect to a Recipient:
(a) income or franchise taxes imposed on (or measured by) net income (i) by the United States of America, or by the jurisdiction under the laws of which such Recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located or (ii) that are Other Connection Taxes;
(b) any branch profits taxes imposed by the United States of America or any similar Taxes imposed by any other jurisdiction in which any Borrower is located;
(c) in the case of a Non U.S. Lender (other than an assignee pursuant to a request by any Borrower under Section 2.19(b)), any U.S. Federal withholding taxes resulting from any law in effect on the date that such Non U.S. Lender becomes a party to this Agreement (or designates a new lending office) (or, in the case of a Participant, on the date that such Participant became a Participant hereunder) or is attributable to such Non U.S. Lender’s failure to comply with Section 2.17(f), except to the extent that such Non U.S. Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from the Borrowers with respect to such withholding taxes pursuant to Section 2.17(a); and

3

(d) any U.S. Federal withholding Taxes imposed under FATCA.
“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code.
“Maturity Date” means February 11, 2016.
“Permitted Refinancing” means, with respect to any Indebtedness, any refinancings, refundings, renewals or extensions thereof; provided that the amount of such Indebtedness is not increased at the time of such refinancing, refunding, renewal or extension except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such refinancing and by an amount equal to any existing commitments unutilized thereunder and the direct or any contingent obligor with respect thereto is not changed, as a result of or in connection with such refinancing, refunding, renewal or extension (other than as a result of intercompany transactions permitted pursuant to Section 6.04); and provided, still further, that the terms relating to principal amount, amortization, maturity, collateral (if any) and subordination (if any), and other material terms taken as a whole, of any such refinancing, refunding, renewing or extending Indebtedness, and of any agreement entered into and of any instrument issued in connection therewith, are no less favorable in any material respect to the Loan Parties or the Lenders than the terms of any agreement or instrument governing the Indebtedness being refinanced, refunded, renewed or extended and the interest rate applicable to any such refinancing, refunding, renewing or extending Indebtedness does not exceed the then applicable market interest rate.
“Specified Restricted Payment” means any Restricted Payment permitted to be made under this Agreement so long as immediately prior to and immediately after giving effect (including giving effect on a Pro Forma Basis) to such Restricted Payment the aggregate amount of unrestricted and unencumbered cash and Cash Equivalents of Holdings and its Subsidiaries is at least $35,000,000.
“Syndication Agent” means each of RBS Citizens, N.A. and Silicon Valley Bank in its capacity as a syndication agent for the credit facility evidenced by this Agreement.
“Term Lender” means, as of any date of determination, each Lender having a Term Loan Commitment, an Additional Term Loan Commitment or that holds Term Loans.
“Term Loans” means the term loans made by the Term Lenders to the Borrowers pursuant to Section 2.01.  After giving effect to the funding of the Additional Term Loans on the Amendment No. 1 Effective Date, the aggregate outstanding principal amount of all Term Loans at such time shall be $70,000,000 and each Term Lender’s respective portion of all Term Loans at such time is set forth on Schedule 2.01.
(j)    Section 1.01 of the Credit Agreement is amended to delete the definition of “Silver Point Refinancing” appearing therein.
(k)    Section 1.07(d) of the Credit Agreement is amended to delete the reference to “Section 6.05(e)” appearing therein and to replace such reference with “Section 6.06(e)”.

4

(l)    Section 2.01 of the Credit Agreement is amended to (i) delete the word “and” appearing after clause (a) thereof and (ii) add the following as a new clause (c) thereof immediately following clause (b) thereof:
and (c) on the Amendment No. 1 Effective Date, each Term Lender with an Additional Term Loan Commitment agrees to make an Additional Term Loan to the Borrowers in Dollars in an amount equal to such Lender’s Additional Term Loan Commitment by making immediately available funds available to the Administrative Agent’s designated account, not later than the time specified by the Administrative Agent.  The Additional Term Loans shall be deemed to be “Term Loans” made on the Amendment No. 1 Effective Date for all purposes of the Loan Documents.
(m)    Section 2.09 of the Credit Agreement is amended to amend and restate clause (a) thereof as follows:
(a) Unless previously terminated pursuant to the terms of this Agreement, (i) the Term Loan Commitments shall terminate at 3:00 p.m. (New York City time) on the Effective Date, (ii) the Additional Term Loan Commitments shall terminate at 3:00 p.m. (New York City time) on the Amendment No. 1 Effective Date and (iii) all other Commitments shall terminate on the Maturity Date.
(n)    Section 2.10 of the Credit Agreement is amended to delete the amount “$7,083,333” appearing therein and to replace such amount with the amount “$5,833,333”.
(o)    Section 2.20 of the Credit Agreement is amended to delete the reference to “Section 6.12” appearing therein and to replace such reference with “Section 6.11”.
(p)    Each of Sections 2.20 and 9.02(c) of the Credit Agreement is amended to delete each reference to the word “initial” appearing therein.
(q)    Section 3.05(b) of the Credit Agreement is amended to delete the date “March 31, 2011” appearing therein and to replace such date with “September 30, 2012”.
(r)    Section 5.01(a) of the Credit Agreement is amended to add the parenthetical “(other than any such exception or explanatory paragraph solely with respect to, or expressly resulting solely from, an upcoming maturity date under the Facilities that is scheduled to occur within one year from the time such report and opinion are delivered)” to the end thereof.
(s)    Section 5.05 of the Credit Agreement is amended to (i) delete the semicolon appearing at the end of clause (a) thereof and replace such semicolon with a period, (ii) delete the word “take” appearing in clause (b) thereof and replace such word with “Take”, (iii) delete the phrase “; and” appearing at the end of clause (b) thereof and replace such phrase with a period and (iv) delete the word “preserve” appearing in clause (c) thereof and replace such word with “Preserve”.
(t)    Section 5.06 of the Credit Agreement is amended to (i) delete the phrase “(b)” appearing therein and (ii) add the phrase “, in each case,” immediately following the phrase “replacements thereof” appearing therein.
(u)    Section 5.18 of the Credit Agreement is deleted in its entirety.

5

(v)    Section 6.01(q) of the Credit Agreement is amended to add the phrase “or (g)” immediately following the phrase “Section 6.02(d)” appearing therein.
(w)    Section 6.02 of the Credit Agreement is amended to (i) add the phrase “and any Permitted Refinancing thereof” to the end of clause (g) thereof, (ii) add the phrase “, at the time of the incurrence thereof,” immediately following the phrase “so long as” appearing in clause (i) thereof, (iii) delete the word “Holding” appearing in clause (k) thereof and to replace such word with “Holdings” and (iv) amend and restate clauses (d) and (f) thereof in their entirety to read as follows, respectively:
(d) Indebtedness outstanding on the date hereof and listed on Schedule 6.02(d) and any Permitted Refinancing thereof;
(f) Indebtedness in respect of Capitalized Leases, Synthetic Lease Obligations and purchase money obligations for fixed or capital assets within the limitations set forth in Section 6.01(i) so long as at the time of the incurrence of such Indebtedness no Default or Event of Default shall have occurred and be continuing or would result therefrom; provided, however, that the aggregate amount of all such Indebtedness at any one time outstanding under this clause (f) shall not exceed $20.0 million;
(x)    Section 6.03 of the Credit Agreement is amended to (i) add the phrase “(x) ” immediately prior to the phrase “the Consolidated Leverage Ratio” appearing in clause (h) thereof, (ii) add the phrase “ or (y) solely in connection with any acquisition permitted pursuant to Section 6.3(g), the Consolidated Leverage Ratio does not exceed 1.35 to 1.00 and the aggregate amount of unrestricted and unencumbered cash and Cash Equivalents of Holdings and its Subsidiaries is at least $35,000,000” immediately following the phrase “does not exceed 1.25 to 1.00” appearing in clause (h) thereof and (iii) amend and restate the first paragraph of clause (g) thereof and clauses (i), (ii) and (iii) appearing in the proviso to clause (g) thereof to read as follows, respectively:
(g) the purchase or other acquisition (including as a result of a merger or consolidation) of Equity Interests (other than directors’ qualifying shares), in, or all or substantially all of the property of, any Person; provided that, with respect to each purchase or other acquisition made pursuant to this Section 6.03(g):
(i) any newly-created or acquired Subsidiary in connection with such purchase or other acquisition shall comply with the requirements of Section 5.12;
(ii) upon the consummation thereof, any newly-created or acquired Subsidiary in connection with such purchase or acquisition will be (A) a direct or indirect Wholly Owned Subsidiary of Holdings (including as a result of a merger or consolidation) or (B) a joint venture that is a Foreign Subsidiary of Holdings or one or more of its Wholly Owned Subsidiaries;
(iii) (A) the aggregate amount of total cash consideration and indebtedness assumed in accordance with the terms of Section 6.02(g) in respect of purchases or other acquisitions of Persons that do become Loan Parties at the time of such purchase or acquisition from the date hereof shall not exceed (when taken together with the aggregate amount of Investments made in reliance on the $50.0 million allowance under Section 6.03(h) at such time) $50.0 million (provided that the foregoing $50.0 million limitation shall not apply so long as both immediately prior to and after giving effect (on a Pro Forma Basis) to any such purchase or acquisition, (x) the Consolidated Leverage Ratio does not exceed 1.25 to 1.00 or (y) the 

6

Consolidated Leverage Ratio does not exceed 1.35 to 1.00 and the aggregate amount of unrestricted and unencumbered cash and Cash Equivalents of Holdings and its Subsidiaries is at least $35,000,000) and (B) the total cash consideration in respect of purchases or other acquisitions of Persons that do not become Loan Parties at the time of such purchase or acquisition from the date hereof shall not exceed $25.0 million;
(y)    Section 6.04 of the Credit Agreement is amended to delete the reference to “5.15” appearing therein and to replace such reference with “5.17”.
(z)    Section 6.05 of the Credit Agreement is amended to (i) add the phrase “at the time of such grant” immediately following the phrase “and be continuing” appearing in clause (h) thereof and (ii) delete the phrase “Section 6.05(a) through Section 6.05(h)” appearing therein and to replace such phrase with “Section 6.05(g) or Section 6.05(h)”.
(aa)    Section 6.06 of the Credit Agreement is amended to (i) delete the phrase “, so long as no Default shall have occurred and be continuing at the time of any action described below or would result therefrom” appearing therein and (ii) delete the phrase “so long as no Default has occurred and is continuing” appearing in clause (e) thereof and to replace such phrase with “so long as no Default shall have occurred and be continuing at the time of such Restricted Payment”.
(bb)    Section 6.15 of the Credit Agreement is amended to delete the phrase “Credit Extensions” appearing therein and to replace such phrase with “Secured Obligations”.
(cc)    Paragraph eight of Article VIII of the Credit Agreement is amended to (i) add the phrase “or Documentation Agent” immediately following the phrase “a Syndication Agent” appearing in the first sentence thereof and (ii) delete the phrase “Syndication Agent” appearing in the final sentence thereof and to replace such phrase with “a Syndication Agent or Documentation Agent, as applicable,”.
(dd)    Section 9.02(b) of the Credit Agreement is amended to add the phrase “ or an increase in the Revolving Commitments by any Increasing Lender or Augmenting Lender” immediately following the phrase “Incremental Term Loan Amendment” appearing in clause (x) thereof.
(ee)    Schedules 2.01, 3.06 and 3.17(d) to the Credit Agreement are amended and restated in their entirety in the forms of Schedules 2.01, 3.06 and 3.17(d), respectively, attached hereto.
2.    Conditions of Effectiveness.  The effectiveness of this Amendment (the “Amendment No. 1 Effective Date”) is subject to the satisfaction of the following conditions precedent:
(a)    The Administrative Agent shall have received counterparts of (i) this Amendment duly executed by the Company, the Lenders, the Issuing Bank, the Swingline Lender and the Administrative Agent and (ii) the Consent and Reaffirmation attached hereto duly executed by the Subsidiary Guarantors.
(b)    The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Lenders and dated the Amendment No. 1 Effective Date) of  Weil, Gotshal & Manges LLP, counsel for the Loan Parties, reasonably satisfactory to the Administrative Agent.  Holdings hereby requests such counsel to deliver such opinion.
(c)    The Administrative Agent shall have received (i) a certificate signed by Responsible Officer of Holdings certifying that, after giving effect (including giving effect on a Pro Forma Basis) to the Amendment and the making of the Additional Term Loans, Holdings is in compliance (on a Pro Forma Basis) 

7

with the covenants contained in Section 6.11 of the Credit Agreement and (ii) such other documents and certificates as the Administrative Agent or its counsel may reasonably request, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.
(d)    The Administrative Agent shall have received, for the account of each Lender party hereto that delivers its executed signature page to this Amendment by no later than the date and time specified by the Administrative Agent, an upfront fee in an amount equal to the amount previously disclosed to the Lenders.
(e)    The Administrative Agent shall have received payment of the Administrative Agent’s and its affiliates’ fees and reasonable out-of-pocket expenses (including reasonable out-of-pocket fees and expenses of counsel for the Administrative Agent) in connection with this Amendment.
3.    Representations and Warranties of the Borrowers.  Each Borrower hereby represents and warrants as follows:
(a)    This Amendment and the Credit Agreement as modified hereby constitute legal, valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their terms, except to the extent that the enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws generally affecting creditors’ rights and by equitable principles (regardless of whether enforcement is sought in equity or at law).
(b)    As of the date hereof and after giving effect to the terms of this Amendment, (i) no Default or Event of Default has occurred and is continuing and (ii) the representations and warranties of the Borrowers set forth in the Credit Agreement are true and correct in all material respects, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties continue to be true and correct as of such specified earlier date; provided, that the materiality qualifier set forth in this paragraph (ii) shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof.
4.    Reference to and Effect on the Credit Agreement.
(a)    Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as amended hereby.
(b)    The Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.
(c)    Except with respect to the subject matter hereof, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith.
5.    Governing Law.  This Amendment shall be construed in accordance with and governed by the law of the State of New York.
6.    Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

8

7.    Counterparts.  This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument.  Signatures delivered by facsimile or PDF shall have the same force and effect as manual signatures delivered in person.
[Signature Pages Follow]

9

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

VONAGE AMERICA INC.,
as a Borrower

By:__/s/ Kurt M. Rogers_________________________ 
Name:     Kurt M. Rogers
Title:    Vice President & Secretary

VONAGE HOLDINGS CORP.
as a Borrower

By:___ /s/ Barry L. Rowan___________________ 
Name:     Barry L. Rowan
		
	Title:
	Executive Vice President, Chief Financial Officer, Chief Administrative Officer and Treasurer

Signature Page to Amendment No. 1 to
Credit Agreement dated as of July 29, 2011
Vonage America Inc. and Vonage Holdings Corp.

JPMORGAN CHASE BANK, N.A.,
individually as a Lender, as the Issuing Bank, as the Swingline Lender and as Administrative Agent

By:___/s/ Lawrence Normile___________
Name:     Lawrence Normile
Title:    Authorized Signor

Signature Page to Amendment No. 1 to
Credit Agreement dated as of July 29, 2011
Vonage America Inc. and Vonage Holdings Corp.

	
		
	RBS Citizens, N.A.:

	 

	 

	 

	 

	 

	By __/s/ William M. Clossy_____________

	 
	Name: William M. Clossy

	 
	Title:     Vice President

	 

	 

	 

	 

	 

	 

	 

	 
	 

	 
	 

Signature Page to Amendment No. 1 to
Credit Agreement dated as of July 29, 2011
Vonage America Inc. and Vonage Holdings Corp.

	
		
	KEYBANK NATIONAL ASSOCIATION, as a Lender:

	 

	 

	 

	 

	 

	By ____/s/ James Gelle____________________

	 
	Name: James Gelle

	 
	Title:    Vice President

	 

	 

	 

Signature Page to Consent and Reaffirmation to 
Amendment No. 1 to Credit Agreement dated as of July 29, 2011
Vonage America Inc. and Vonage Holdings Corp.

	
		
	Name of Lender:

	 

	Silicon Valley Bank

	 

	 

	 

	By ___/s/ Michael Shuhy___________________

	 
	Name:  Michael Shuhy

	 
	Title:     Vice President

	 

	 

	 

Signature Page to Consent and Reaffirmation to 
Amendment No. 1 to Credit Agreement dated as of July 29, 2011
Vonage America Inc. and Vonage Holdings Corp.

CONSENT AND REAFFIRMATION
Each of the undersigned hereby acknowledges receipt of a copy of the foregoing Amendment No. 1 to the Credit Agreement dated as of July 29, 2011 (as amended, restated, supplemented or otherwise modified, the “Credit Agreement”) by and among Vonage America Inc., Vonage Holdings Corp., the financial institutions from time to time party thereto (the “Lenders”) and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), which Amendment No. 1 is dated as of February 11, 2013 (the “Amendment”).  Capitalized terms used in this Consent and Reaffirmation and not defined herein shall have the meanings given to them in the Credit Agreement (as amended by the Amendment).  Without in any way establishing a course of dealing by the Administrative Agent or any Lender, each of the undersigned consents to the Amendment and reaffirms the terms and conditions of the Credit Agreement and any other Loan Document executed by it and acknowledges and agrees that such Credit Agreement and each and every such Loan Document executed by the undersigned in connection with the Credit Agreement remains in full force and effect and is hereby reaffirmed, ratified and confirmed.  All references to the Credit Agreement contained in the above‐referenced documents shall be a reference to the Credit Agreement as so modified by the Amendment.
Dated:  February 11, 2013
[Signature Page Follows]

	
		
	NOVEGA VENTURE PARTNERS, INC.
VONAGE APPLICATIONS INC.
VONAGE INTERNATIONAL INC.
VONAGE MARKETING LLC
VONAGE NETWORK LLC
VONAGE WORLDWIDE INC.

By: __/s/ Kurt M. Rogers___________
Name: Kurt M. Rogers 
Title:    Vice President & Secretary

	DSP LLC

By: ___/s/ Kurt M. Rogers_________
Name: Kurt M. Rogers 
Title:    President

	 
	 

Signature Page to Consent and Reaffirmation to 
Amendment No. 1 to Credit Agreement dated as of July 29, 2011
Vonage America Inc. and Vonage Holdings Corp.

SCHEDULE 2.01
COMMITMENTS
	
										
	LENDER
	REVOLVING COMMITMENT
	ADDITIONAL TERM LOAN COMMITMENT
	OUTSTANDING TERM LOANS AS OF AMENDMENT NO. 1 EFFECTIVE DATE

	JPMORGAN CHASE BANK, N.A.
	

	$25,862,068.96
	

	

	$9,971,263.70
	

	

	$24,137,931.04
	

	RBS CITIZENS, N.A.
	

	$18,103,448.28
	

	

	$6,271,551.22
	

	

	$16,896,551.72
	

	SILICON VALLEY BANK
	

	$18,103,448.28
	

	

	$8,042,384.64
	

	

	$16,896,551.72
	

	KEYBANK NATIONAL ASSOCIATION
	

	$12,931,034.48
	

	

	$3,214,798.44
	

	

	$12,068,965.52
	

	AGGREGATE COMMITMENTS
	

	$75,000,000.00
	

	

	$27,499,998.00
	

	

	$70,000,000.00
	

SCHEDULE 3.06
MATERIAL LITIGATION
Bear Creek Technologies, Inc. On February 22, 2011, Bear Creek Technologies, Inc. (“Bear Creek”) filed a lawsuit against Vonage Holdings Corp., Vonage America, Inc., and Vonage Marketing LLC in the United States District Court for the Eastern District of Virginia (Norfolk Division) alleging that Vonage’s products and services are covered by United States Patent No. 7,889,722, entitled “System for Interconnecting Standard Telephony Communications Equipment to Internet Protocol Networks” (the “722 Patent”). The suit also named numerous other defendants, including Verizon Communications, Inc., Comcast Corporation, Time-Warner Cable, Inc., AT&T, Inc., and T-Mobile USA Inc. On August 17, 2011, the Court dismissed Bear Creek’s case against the Vonage entities, as well as all the other defendants, except for one defendant. Later, on August 17, 2011, Bear Creek re-filed its complaint concerning the ‘722 Patent in the United States District Court for the District of Delaware against the same Vonage entities. In its Delaware complaint, Bear Creek alleges that Vonage is infringing one or more claims of the ‘722 Patent.  In addition, Bear Creek alleges that Vonage is contributing to and inducing infringement of one or more claims of the ‘722 Patent. On September 28, 2011, Vonage filed a motion to dismiss Bear Creek’s claims for induced, contributory, and willful infringement, which was denied on September 27, 2012. On January 25, 2012, Bear Creek filed a motion with the United States Judicial Panel on Multidistrict Litigation seeking to transfer and consolidate its litigation against Vonage with thirteen separate actions Bear Creek filed in the U.S. District Courts for Delaware and the Eastern District of Virginia.  On May 2, 2012, the Multidistrict Litigation Panel granted Bear Creek’s motion and ordered the coordination or consolidation for pretrial proceedings of all fourteen actions in the U.S. District Court for the District of Delaware.  On October 11, 2012, Vonage filed an answer to Bear Creek’s complaint, including counterclaims of non-infringement and invalidity of the ‘722 patent.  On November 5, 2012, Bear Creek filed an answer to Vonage’s counterclaims.  On January 22, 2013, the Court set a conference in the case for March 19, 2013, for the purpose of discussing case management including setting a case schedule. 
On March 8, 2012, a third-party requested the United States Patent and Trademark Office (“USPTO”) to reexamine the validity of the asserted ‘722 Patent.  The USPTO granted the request on April 26, 2012, and subsequently issued an initial Office Action rejecting all of the ‘722 Patent claims.  After reconsideration based on statements made by the patentee, however, the USPTO on September 19, 2012, reversed its initial rejection, and confirmed all claims as patentable over the references cited in the reexamination request.  A second request for reexamination of the ‘722 Patent was filed on September 12, 2012, by Cisco Systems, Inc., challenging the validity of the ‘722 Patent.  Cisco’s request was granted by the USPTO on November 28, 2012.  No Office Action in this reexamination has been issued by the USPTO.  A third request for reexamination of the ‘722 Patent was filed on September 14, 2012, and the USPTO denied this request on December 6, 2012.
OpinionLab, Inc.  On July 18, 2012, OpinionLab, Inc. (“OpinionLab”) filed a lawsuit against IPerceptions, Inc. and IPerceptions US, Inc. (“IPerceptions”) alleging claims of patent infringement, breach of contract,  misappropriation of trade secrets, and tortious interference with business expectancy.  On August 16, 2012, OpinionLab filed an amended complaint, adding Vonage Marketing LLC and Vonage Holdings Corp. as defendants, and alleging that Vonage’s products and services are covered by United States Patent Nos. 6,421,724, 6,606,581, 6,928,392, 7,085,820, 7,370,285, 8,024,668, and 8,041,805.  OpinionLab alleged direct, indirect and willful infringement against Vonage.  IPerceptions, the supplier to Vonage of the accused product in this lawsuit, has agreed to fully indemnify and defend Vonage in this lawsuit.  On September 11, 2012, IPerceptions and Vonage each moved to dismiss OpinionLab’s indirect and willful patent infringement claims.  The motions were denied on November 8, 2012.  Vonage answered the complaint on December 7, 2012.  The court has scheduled a status hearing for February 19, 2013.

SCHEDULE 3.17(d)
INFRINGED PROPRIETARY RIGHTS
Bear Creek Technologies, Inc. On February 22, 2011, Bear Creek Technologies, Inc. (“Bear Creek”) filed a lawsuit against Vonage Holdings Corp., Vonage America, Inc., and Vonage Marketing LLC in the United States District Court for the Eastern District of Virginia (Norfolk Division) alleging that Vonage’s products and services are covered by United States Patent No. 7,889,722, entitled “System for Interconnecting Standard Telephony Communications Equipment to Internet Protocol Networks” (the “722 Patent”). The suit also named numerous other defendants, including Verizon Communications, Inc., Comcast Corporation, Time-Warner Cable, Inc., AT&T, Inc., and T-Mobile USA Inc. On August 17, 2011, the Court dismissed Bear Creek’s case against the Vonage entities, as well as all the other defendants, except for one defendant. Later, on August 17, 2011, Bear Creek re-filed its complaint concerning the ‘722 Patent in the United States District Court for the District of Delaware against the same Vonage entities. In its Delaware complaint, Bear Creek alleges that Vonage is infringing one or more claims of the ‘722 Patent.  In addition, Bear Creek alleges that Vonage is contributing to and inducing infringement of one or more claims of the ‘722 Patent. On September 28, 2011, Vonage filed a motion to dismiss Bear Creek’s claims for induced, contributory, and willful infringement, which was denied on September 27, 2012. On January 25, 2012, Bear Creek filed a motion with the United States Judicial Panel on Multidistrict Litigation seeking to transfer and consolidate its litigation against Vonage with thirteen separate actions Bear Creek filed in the U.S. District Courts for Delaware and the Eastern District of Virginia.  On May 2, 2012, the Multidistrict Litigation Panel granted Bear Creek’s motion and ordered the coordination or consolidation for pretrial proceedings of all fourteen actions in the U.S. District Court for the District of Delaware.  On October 11, 2012, Vonage filed an answer to Bear Creek’s complaint, including counterclaims of non-infringement and invalidity of the ‘722 patent.  On November 5, 2012, Bear Creek filed an answer to Vonage’s counterclaims.  On January 22, 2013, the Court set a conference in the case for March 19, 2013, for the purpose of discussing case management including setting a case schedule. 
On March 8, 2012, a third-party requested the United States Patent and Trademark Office (“USPTO”) to reexamine the validity of the asserted ‘722 Patent.  The USPTO granted the request on April 26, 2012, and subsequently issued an initial Office Action rejecting all of the ‘722 Patent claims.  After reconsideration based on statements made by the patentee, however, the USPTO on September 19, 2012, reversed its initial rejection, and confirmed all claims as patentable over the references cited in the reexamination request.  A second request for reexamination of the ‘722 Patent was filed on September 12, 2012, by Cisco Systems, Inc., challenging the validity of the ‘722 Patent.  Cisco’s request was granted by the USPTO on November 28, 2012.  No Office Action in this reexamination has been issued by the USPTO.  A third request for reexamination of the ‘722 Patent was filed on September 14, 2012, and the USPTO denied this request on December 6, 2012.
OpinionLab, Inc.  On July 18, 2012, OpinionLab, Inc. (“OpinionLab”) filed a lawsuit against IPerceptions, Inc. and IPerceptions US, Inc. (“IPerceptions”) alleging claims of patent infringement, breach of contract,  misappropriation of trade secrets, and tortious interference with business expectancy.  On August 16, 2012, OpinionLab filed an amended complaint, adding Vonage Marketing LLC and Vonage Holdings Corp. as defendants, and alleging that Vonage’s products and services are covered by United States Patent Nos. 6,421,724, 6,606,581, 6,928,392, 7,085,820, 7,370,285, 8,024,668, and 8,041,805.  OpinionLab alleged direct, indirect and willful infringement against Vonage.  IPerceptions, the supplier to Vonage of the accused product in this lawsuit, has agreed to fully indemnify and defend Vonage in this lawsuit.  On September 11, 2012, IPerceptions and Vonage each moved to dismiss OpinionLab’s indirect and willful patent infringement 

claims.  The motions were denied on November 8, 2012.  Vonage answered the complaint on December 7, 2012.  The court has scheduled a status hearing for February 19, 2013.

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