Document:

Exhibit 10.12

 

 

VONAGE HOLDINGS CORP.

THIRD
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

April 27, 2005

 

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
  Page

  
	
  ARTICLE 1

  	
   

  
	
   

  	
   

  	
   

  
	
  GENERAL

  	
   

  
	
  1.1

  	
  Certain
  Definitions

  	
  2

  
	
  ARTICLE 2

  	
   

  
	
   

  	
   

  	
   

  
	
  RESTRICTIONS ON TRANSFER; REGISTRATION

  	
   

  
	
  2.1

  	
  Restrictions on Transfer

  	
  6

  
	
  2.2

  	
  Mandatory Registration

  	
  8

  
	
  2.3

  	
  Demand Registration

  	
  9

  
	
  2.4

  	
  Piggyback Registrations

  	
  11

  
	
  2.5

  	
  Form S-3 Registration

  	
  11

  
	
  2.6

  	
  Expenses of Registration

  	
  13

  
	
  2.7

  	
  Underwriting

  	
  13

  
	
  2.8

  	
  Obligations of the Company

  	
  16

  
	
  2.9

  	
  Termination of Registration Rights

  	
  18

  
	
  2.10

  	
  Furnishing Information

  	
  18

  
	
  2.11

  	
  Indemnification

  	
  18

  
	
  2.12

  	
  Transfer or Assignment of Registration Rights

  	
  20

  
	
  2.13

  	
  Amendment of Registration Rights

  	
  21

  
	
  2.14

  	
  “Market Stand-Off” Agreement

  	
  21

  
	
  2.15

  	
  Rule 144 Reporting

  	
  22

  
	
  ARTICLE 3

  	
   

  
	
   

  	
   

  	
   

  
	
  COVENANTS OF THE COMPANY

  	
   

  
	
  3.1

  	
  Basic Financial Information and Reporting

  	
  22

  
	
  3.2

  	
  Inspection Rights

  	
  24

  
	
  3.3

  	
  Board Observation Right

  	
  24

  
	
  3.4

  	
  Directors’ Expenses

  	
  25

  
	
  3.5

  	
  Board of Directors Meetings; Board Composition

  	
  25

  
	
  3.6

  	
  Insurance

  	
  25

  
	
  3.7

  	
  Reservation of Common Stock

  	
  26

  
	
  3.8

  	
  Option Grants; Stock Vesting; Stock Repurchase;
  Exercise Price

  	
  26

  
	
  3.9

  	
  Acceleration of Vesting

  	
  26

  
	
  3.10

  	
  Non-Competition Agreement and Confidential
  Information and Invention

  	
   

  
	
   

  	
  Assignment Agreement

  	
  27

  
	
  3.11

  	
  Assignment of Right of First Refusal

  	
  27

  
	
  3.12

  	
  Market Stand-Off Agreement

  	
  27

  

 

i

 

	
  3.13

  	
  Payment of Taxes, Compliance with Laws, etc

  	
  27

  
	
  3.14

  	
  Material Changes and Litigation

  	
  28

  
	
  3.15

  	
  Qualified Small Business

  	
  28

  
	
  3.16

  	
  Real Property Holding Corporation

  	
  28

  
	
  3.17

  	
  Management Compensation

  	
  29

  
	
  3.18

  	
  Enforcement of Bylaws

  	
  29

  
	
  3.19

  	
  No Impairment

  	
  29

  
	
  3.20

  	
  Environmental
  Covenant

  	
  29

  
	
  3.21

  	
  Employment
  Covenant

  	
  29

  
	
  3.22

  	
  Board and Officer Covenant

  	
  29

  
	
  3.23

  	
  Amended and Restated Certificate of Incorporation

  	
  30

  
	
  3.24

  	
  Termination of Covenants; Assignment of Covenants

  	
  30

  
	
  ARTICLE 4

  	
   

  
	
   

  	
   

  	
   

  
	
  RIGHTS OF FIRST REFUSAL

  	
   

  
	
  4.1

  	
  Subsequent Offerings

  	
  30

  
	
  4.2

  	
  Exercise of Rights

  	
  31

  
	
  4.3

  	
  Issuance of New Securities to Other Persons

  	
  31

  
	
  4.4

  	
  Termination and Waiver of Rights of First Refusal

  	
  31

  
	
  4.5

  	
  Transfer of Rights of First Refusal

  	
  31

  
	
  4.6

  	
  Excluded Securities

  	
  32

  
	
  ARTICLE 5

  	
   

  
	
   

  	
   

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
  5.1

  	
  Amendment and Waiver

  	
  33

  
	
  5.2

  	
  Waiver of Preemptive Rights

  	
  33

  
	
  5.3

  	
  Governing Law

  	
  33

  
	
  5.4

  	
  Jurisdiction; Venue

  	
  33

  
	
  5.5

  	
  Waiver of Jury Trial

  	
  34

  
	
  5.6

  	
  Equitable Remedies

  	
  34

  
	
  5.7

  	
  Arbitration

  	
  34

  
	
  5.8

  	
  Successors and Assigns

  	
  34

  
	
  5.9

  	
  Entire Agreement

  	
  34

  
	
  5.10

  	
  Severability

  	
  35

  
	
  5.11

  	
  Delays or Omissions

  	
  35

  
	
  5.12

  	
  Notices

  	
  35

  
	
  5.13

  	
  Attorneys’ Fees

  	
  36

  
	
  5.14

  	
  Titles and Subtitles

  	
  36

  
	
  5.15

  	
  Limitation on Subsequent Rights

  	
  36

  
	
  5.16

  	
  Additional Investors

  	
  37

  
	
  5.17

  	
  Non-Business Days

  	
  37

  
	
  5.18

  	
  Counterparts

  	
  37

  
	
  5.19

  	
  Telecopy Execution and Delivery

  	
  37

  
	
  5.20

  	
  Aggregation of Stock

  	
  37

  

 

ii

 

VONAGE HOLDINGS CORP.

THIRD
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

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

RECITALS

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

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

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

 

 

 

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

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

AGREEMENT

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

ARTICLE 1

GENERAL

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

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

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

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

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

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

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

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

 

2

 

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

(h)           “Founder” shall mean Jeffrey Citron.

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

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

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

(l)            “Meritech” means Meritech Capital Partners.

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

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

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

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

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

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

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

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

 

3

 

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

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

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

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

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

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

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

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

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

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

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

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

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

 

4

 

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

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

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

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

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

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

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

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

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

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

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

 

5

 

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

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

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

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

ARTICLE 2

RESTRICTIONS ON TRANSFER; REGISTRATION

2.1          Restrictions on Transfer.

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

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

(ii)           (A) the transferee has agreed
in writing to be bound by the terms of this Agreement (for purposes of
clarification, this condition (A) shall apply only to transferees who acquired
Shares or Registrable Securities prior to the Initial Public Offering and only
with respect to such shares), (B) such Holder shall have notified the Company
of the proposed disposition within a reasonable period of time prior to such
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company (it
being understood that (i) an opinion of Wilson Sonsini Goodrich & Rosati, P.C.
(“WSGR”) shall be deemed
satisfactory with respect to proposed transfers by NEA and any permitted
transferee thereof, (ii) an opinion of Ropes & Gray LLP shall be deemed
satisfactory with respect to proposed transfers by Bain Capital and any
permitted transferee thereof, (iii) an opinion of Latham & Watkins LLP
shall be deemed satisfactory with respect to proposed transfers by 

 

6

 

Meritech and any permitted
transferee thereof, and (iv) an opinion of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP shall be deemed satisfactory with respect to
proposed transfers by 3i and any permitted transferee thereof), that such
disposition will not require registration of such shares under the Securities Act.  It is agreed that the Company will not
require opinions of counsel for transactions made pursuant to and in accordance
with Rule 144, except in unusual circumstances.

(b)           Notwithstanding the provisions of subsection
(a) above, no such restriction shall apply to a transfer by a Holder that is
(A) a partnership or limited partnership transferring to its partners, former
partners, limited partners or former limited partners in accordance with
partnership or limited partnership interests, as may be applicable, (B) a
corporation transferring to a wholly owned subsidiary or a parent corporation
that owns all of the capital stock of the Holder, (C) a limited liability
company transferring to its members or former members in accordance with their
interest in the limited liability company, (D) an individual Holder
transferring to the Holder’s family members or trusts for the benefit of such
Holder or such Holder’s family members, (E) an “Affiliate” of such
Holder (as such term is defined under Rule 144), (F) one or more
Affiliated partnerships, limited liability companies or funds managed by a
Holder or any of their respective directors, officers, partners or members or
(G) a transfer not involving any change in beneficial ownership; provided that in each
such case the transferee will agree in writing to be subject to the terms of
this Agreement to the same extent as if such transferee were an original Holder
hereunder.

(c)           Notwithstanding the
foregoing, any other provision of this Agreement or any other provision of any
other agreement among some or all of the parties hereto, 3i Technology Partners
L.P., Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3i Global
Technology 2004-06 L.P. and any 3i Permitted Transferee (as defined below) may,
from time to time, transfer all or any portion of the shares it owns to 3i
Group plc or any affiliate of 3i Group plc or any entity or vehicle including a
partnership in which 3i Group plc and/or its affiliate has a majority economic
interest and which is managed by 3i Group plc or any of its affiliates (each a “3i Permitted Transferee”); provided that in each such case the transferee will agree in
writing to be subject to the terms of this Agreement to the same extent as if
such transferee were an original Holder hereunder.

(d)           Each certificate
representing Shares or Registrable Securities shall be stamped or otherwise
imprinted with legends substantially similar to the following (in addition to
any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR UNLESS THE ISSUER HAS RECEIVED AN OPINION OF LEGAL COUNSEL
SATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

7

 

THE
SALE, PLEDGE, HYPOTHECATION OR OTHER TRANSFER OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN THIRD
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT BY AND BETWEEN THE STOCKHOLDER
AND THE ISSUER OF SUCH SECURITIES, INCLUDING A LOCK-UP PERIOD OF UP TO 180 DAYS
FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT OF THE ISSUER FILED
UNDER THE ACT.  COPIES OF SUCH AGREEMENT
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE ISSUER.  SUCH TRANSFER RESTRICTIONS ARE BINDING ON
TRANSFEREES OF SUCH SECURITIES.

(e)           The Company shall be obligated
to reissue promptly unlegended certificates at the request of any Holder
thereof if (i) the Company has completed the Initial Public Offering, (ii) the
Holder shall have obtained an opinion of counsel (which counsel may be counsel
to the Company) reasonably acceptable to the Company (it being understood that
an opinion of WSGR with respect to such requests by or on behalf of NEA shall
be deemed acceptable) to the effect that the securities proposed to be disposed
of may lawfully be so disposed of without registration, qualification and
legend and (iii) the Holder shall have delivered such securities to the Company
or its transfer agent.

(f)            Any legend endorsed on an
instrument pursuant to applicable state securities laws and the stop-transfer
instructions with respect to such securities shall be removed upon receipt by
the Company of an order of the appropriate Blue Sky authority authorizing such
removal.

2.2          Mandatory Registration.

(a)           The Company shall prepare and file with the
SEC a registration statement on Form S-1 covering the resale, in the manner
reasonably requested by the holders thereof, of all of the Senior Preferred
Registrable Securities (the “Shelf
Registration Statement”) (provided that before filing the Shelf Registration Statement
or any amendments or supplements thereto, the Company shall furnish legal
counsel for the Holders with copies of all such documents to be filed) and
shall use all commercially reasonable efforts to cause the Shelf Registration
Statement to become effective pursuant to Rule 415 under the Securities Act by
the date on which any “market stand-off’ agreement entered into by the Holders
at the request of the underwriters of the Initial Public Offering pursuant to
Section 2.14(a) hereof expires (the “Required
Effective Date”).  Once the
Shelf Registration Statement is declared effective by the SEC, the Company will
cause the Shelf Registration Statement to remain effective throughout, and
immediately available for use at all times until, April 27, 2007.

(b)           Notwithstanding any of the
foregoing to the contrary, the Company may suspend the use of the Shelf
Registration Statement upon written notice to each Holder of Senior Preferred
Registrable Securities at any time when the Company, in its reasonable judgment
after consultation with legal counsel, determines that (A) (i) there is in
existence material nonpublic information regarding a pending material
transaction or transactions, (ii) the disclosure of such information with
respect to such transaction or transactions in the prospectus included in the
Shelf Registration Statement is required, and (iii) the disclosure of such
information at such time 

 

8

 

would be adverse to the
Company, or (B) the prospectus included in the Shelf Registration Statement
includes an untrue statement of material fact or omits a material fact required
to be stated therein or necessary to make the statements therein not misleading
(a “Permissible Blackout”).  Any such Permissible Blackout shall continue
for the period of time that is reasonably necessary for disclosure to occur at
a time that is not adverse to the Company or until such time as the information
or event is no longer material, each as determined in good faith by the Company
after consultation with counsel, provided, however, that no Permissible Blackout shall exceed a period
of 5 consecutive trading days, and the Company may not suspend the use of the
Shelf Registration Statement pursuant to this Section 2.2(b) for more than an
aggregate of 20 trading days.

2.3           Demand Registration.

(a)           Subject to the conditions of this Section 2.3, if the
Company shall receive a written request from the Holders holding not less than
forty percent (40%) of the Registrable Securities then outstanding that the
Company file a registration statement with respect to all or part of the
Registrable Securities under the Securities Act with an anticipated aggregate
offering price of at least $5,000,000 (net of underwriting discounts and
commissions), then the Company shall, within ten (10) calendar days of the
receipt thereof, give written notice of such request to all Holders, and,
subject to the limitations of this Section 2.3, use its best efforts to effect,
as expeditiously as reasonably possible, the registration under the Securities
Act of all Registrable Securities that all Holders request to be registered
pursuant to, and in accordance with, this Agreement (an “Ordinary Demand Registration”).

Subject
to the conditions of this Section 2.3, if the Company shall receive a written
request from the Holders holding not less than sixty-six and two-thirds percent
(66-2/3%) of those Series B/C/D Registrable Securities then outstanding and
held by Series B Holders, Series C Holders, and Series D Holders (calculated
as a single class and on an as-converted to Common Stock basis) that the
Company file a registration statement with respect to all or part of such
Series B/C/D Registrable Securities held by the Series B Holders, the Series C
Holders, and the Series D Holders under the Securities Act with an anticipated
aggregate offering price of at least $5,000,000 (net of underwriting discounts
and commissions), then the Company shall, within ten (10) calendar days of the
receipt thereof, give written notice of such request to all Holders, and,
subject to the limitations of this Section 2.3, use its best efforts to effect,
as expeditiously as reasonably possible, the registration under the Securities
Act of all Registrable Securities that all Holders request to be registered pursuant
to, and in accordance with, this Agreement (a “Series
B/C/D Preferred Demand Registration”).

Subject to the conditions of
this Section 2.3, if the Company shall receive a written request from the
Holders holding not less than thirty-three and one-third percent (33-1/3%) of
those Series E Registrable Securities then outstanding and held by Series E
Holders that the Company file a registration statement with respect to all or
part of such Series E Registrable Securities held by the Series E Holders under
the Securities Act with an anticipated aggregate offering price of at least
$5,000,000 (net of underwriting discounts and commissions), then the Company
shall, within ten (10) calendar days of the receipt thereof, (i) give written
notice of such request to all Holders, and, subject to the limitations of this
Section 2.3, (ii) as soon as practicable, and in any event within 45 days of
receipt of such request, file a registration 

 

9

 

statement
under the Securities Act covering all Registrable Securities which the Holders
request to be registered, and (iii) use its best efforts to cause such
registration statement to be declared effective by the SEC, as expeditiously as
reasonably possible (a “Series E Preferred Demand
Registration”).

(b)           Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement pursuant to this
Section 2.3, a certificate signed by the President or Chief Executive Officer
of the Company (A) stating that in the Board’s good faith judgment it would be
seriously detrimental to the Company and its stockholders for such a
registration statement to be filed in the near future, and (B) setting forth in
reasonable detail the general reasons for such judgment, the Company shall have
the right to defer such filing for a period of not more than 90 days after
receipt of the request of the Holders specified in Section 23(a); provided, however, that the
Company may not utilize this right more than once in any twelve-month period.

(c)           The Company shall not be
required to effect or take any action to effect a registration pursuant to this
Section 2.3:

(i)            prior to the earlier of
April 1, 2007 and 120 days after the Company’s Initial Public Offering;

(ii)           with respect to Ordinary
Demand Registrations, after the Company has effected three Ordinary Demand
Registrations pursuant to this Section 2.3, and such registrations have been
declared or ordered effective (which, for the avoidance of doubt, shall mean
that the registrations shall have been continuously effective for one hundred
eighty (180) calendar days, or until all Registrable Securities covered thereby
have been sold, if earlier);

(iii)          with respect to Series B/C/D
Preferred Demand Registrations, after the Company has effected three Series
B/C/D Demand Registrations pursuant to this Section 2.3, and such registrations
have been declared or ordered effective (which, for the avoidance of doubt,
shall mean that the registrations shall have been continuously effective for
one hundred eighty (180) calendar days, or until all Registrable Securities
covered thereby have been sold, if earlier);

(iv)          with respect to Series E
Preferred Demand Registrations, after the Company has effected three Series E
Preferred Demand Registrations pursuant to this Section 2.3, and such
registrations have been declared or ordered effective (which, for the avoidance
of doubt, shall mean that the registrations shall have been continuously
effective for one hundred eighty (180) calendar days, or until all Registrable
Securities covered thereby have been sold, if earlier);

(v)           if the Company, within
thirty (30) days of its receipt of the request from the Holders provided for in
Section 2.3 (a), provides written notice to all such Holders of its intent to
file a registration statement for its Initial Public Offering within ninety
(90) days (provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective);

 

10

 

(vi)          if the Holders making the
request for Ordinary Demand Registration or Series B/C/D Preferred Demand
Registration provided for in Section 2.3(a) propose to dispose of Registrable
Securities that could be disposed of in a single ordinary brokerage transaction
under the quantity limitation of Rule 144 without a material adverse effect on
the selling price in such transaction (that would not also be present were the
Registrable Securities in question to be disposed of pursuant to an effective
registration statement under the Securities Act);

(vii)         if the Registrable
Securities to be included in the registration statement pursuant to the request
for Series E Preferred Demand Registration provided for in Section 2.3(a) could
be sold without restriction under Rule 144(k); or

(viii)        if the Holders making the
request for Ordinary Demand Registration, Series B/C/D Preferred Demand
Registration or Series E Preferred Demand Registration provided for in Section
2.3(a) propose to dispose of Registrable Securities that may be immediately
registered on Form S-3 pursuant to a request made pursuant to Section 2.5
below.

2.4          Piggyback Registrations.

(a)           The Company shall notify all
Holders of Registrable Securities in writing at least thirty (30) calendar days
prior to the filing of any registration statement under the Securities Act for
purposes of a public offering of securities of the Company (including, but not
limited to, registration statements relating to follow-on offerings of
securities of the Company, but excluding Special Registration Statements) and
will afford each such Holder a reasonable opportunity to include in such
registration statement all or part of such Registrable Securities held by such
Holder; provided that, with respect to the filing of a registration statement
under the Securities Act for purposes of the Company's Initial Public Offering,
such notice shall be given not later than three (3) business days following the
filing of such registration statement. 
Each Holder desiring to include in any such registration statement all
or any part of the Registrable Securities held by such Holder shall, within
fifteen (15) calendar days after receipt of the above-described notice from the
Company, so notify the Company in writing. 
Such notice shall state the intended method of disposition of the
Registrable Securities by such Holder. 
If a Holder decides not to include all of such Holder’s Registrable
Securities in any registration statement thereafter filed by the Company, such
Holder shall nevertheless continue to have the right to include any Registrable
Securities in any subsequent registration statement or registration statements
as may be filed by the Company with respect to offerings of its securities, in
each case subject to the terms and conditions set forth herein.

(b)           Right to Terminate
Registration.  The Company
shall have the right to terminate or withdraw any registration initiated by it
under this Section 2.4, but excluding registration statements filed pursuant to
Sections 2.2, 2.3 and 2.5, prior to the effectiveness of such registration
whether or not any Holder has elected to include securities in such
registration.  The Registration Expenses
of such withdrawn registration shall be borne by the Company in accordance with
Section 2.6 below.

2.5          Form S-3 Registration.  In case the Company shall receive from either
(x) the Holders holding not less than forty percent (40%) of the Registrable
Securities then outstanding, (y) the Holders holding not less than sixty-six
and two-thirds percent (66-2/3%) of those Series B/C/D Registrable Securities
then outstanding, or (z) the Holders holding not less 

 

11

 

than ten percent (10%) of
those Series E Registrable Securities then outstanding, a written request that
the Company effect a registration on Form S-3 (or any applicable successor
form) and any related qualification or compliance with respect to all or a part
of the Registrable Securities owned by such Holders, the Company will:

(a)           within ten (10) calendar
days after receipt of such notice, give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders
of Registrable Securities; and

(b)           as soon as reasonably
practicable, effect such registration (which if requested by Holders holding
Series B/C/D Registrable Securities shall be referred to as a “Series B/C/D Preferred S-3 Registration,”
if requested by Holders holding Series E Preferred Registrable Securities shall
be referred to as a “Series E Preferred S-3
Registration” and if requested by Holders holding Registrable
Securities that are not Series B/C/D Preferred Registrable Securities or Series
E Preferred Registrable Securities (“Junior
Preferred Registrable Securities”) shall be referred to as an “Ordinary S-3 Registration”) and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holders’
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) calendar days after receipt of such written notice from the
Company; provided, however,
that the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 2.5, (i) if Form S-3 is
not available to the Company for such offering, (ii) if the aggregate
proceeds from the sale of Registrable Securities proposed to be sold pursuant
to a Form S-3 registration statement will not exceed $1,000,000, (iii) if, with
respect to the Series B/C/D Preferred S-3 Registrations, the Company has
effected two Series B/C/D Preferred S-3 Registrations pursuant to this Section
2.5 in the preceding 12 months, and such registrations have been declared or
ordered effective (which, for the avoidance of doubt, shall mean that the
registrations shall have been continuously effective for one hundred eighty
(180) calendar days, or until all Registrable Securities covered thereby have
been sold, if earlier), (iv) if, with respect to the Series E Preferred S-3
Registrations, the Company has effected two Series E Preferred S-3
Registrations pursuant to this Section 2.5 in the preceding 12 months, and such
registrations have been declared or ordered effective (which, for the avoidance
of doubt, shall mean that the registrations shall have been continuously
effective for one hundred eighty (180) calendar days, or until all Registrable
Securities covered thereby have been sold, if earlier), (v) if, with respect to
the Ordinary S-3 Registrations, the Company has effected two Ordinary S-3
Registrations pursuant to this Section 2.5 in the preceding 12 months, and such
registrations have been declared or ordered effective (which, for the avoidance
of doubt, shall mean that the registrations shall have been continuously
effective for one hundred eighty (180) calendar days, or until all Registrable
Securities covered thereby have been sold, if earlier), (vi) if the Holders
requesting a Series B/C/D Preferred S-3 Registration or Ordinary S-3
Registration propose to dispose of Registrable Securities that could be
disposed of in a single ordinary brokerage transaction under the quantity
limitation of Rule 144 without a material adverse effect on the selling price
in such transaction (that would not also be present were the Registrable
Securities in question to be disposed of pursuant to an effective registration
statement under the Securities Act), or (vii) if the Registrable Securities to
be included in the registration statement pursuant to the request for Series E
Preferred S-3 Registration could be sold without restriction under Rule 144(k).

 

12

 

Subject to the foregoing,
the Company shall file a Form S-3 registration statement covering the
Registrable Securities and other securities so requested to be registered as
soon as reasonably practicable after receipt of the requests of the
Holders.  Registrations effected pursuant
to this Section 2.5 shall not be counted as demands for registration effected
pursuant to Section 2.3.

2.6          Expenses of Registration.  Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration effected
pursuant to Section 2.2, 2.3, Section 2.4 or Section 2.5 herein shall be
borne by the Company.  All Selling
Expenses incurred in connection with any registrations under Section 2.3,
Section 2.4 or Section 2.5 shall be borne by the holders of the securities
so registered pro rata on the basis of the
number of shares so registered.  The
Company shall not, however, be required to pay for expenses of any registration
proceeding begun pursuant to Section 2.3, the request of which has been
subsequently withdrawn by the Holders initiating such registration unless (a)
the withdrawal is based upon material adverse information concerning the
Company of which such Holders were not aware at the time of such request, (b)
sixty-six and two-thirds percent (66-2/3%) of the Holders of Series B/C/D
Registrable Securities, sixty-six and two-thirds percent (66-2/3%) of the
Holders of Series E Registrable Securities, or a majority of Junior Preferred Registrable
Securities, as applicable, agree to forfeit their right to one Series B/C/D
Preferred Demand Registration, Series E Preferred Demand Registration or
Ordinary Demand Registration, as applicable, pursuant to Section 2 (in which
event such right shall be forfeited by all Holders of Senior Preferred
Registrable Securities or Junior Preferred Registrable Securities, as
applicable); provided sixty-six and two-thirds percent (66-2/3%) of the holders
of the Series B/C/D Registrable Securities, sixty-six and two-thirds
percent (66-2/3%) of the holders of the Series E Registrable Securities, and a
majority of the holders of Junior Preferred Registrable Securities shall each
be entitled to one withdrawal of a demand, after which withdrawal, such Holders
may be required to forfeit a demand right as a condition of being excused from
the obligation to pay the registration expenses associated with a subsequent
withdrawal.  If such Holders are required
to pay the Registration Expenses, such expenses shall be borne by the holders
of securities (including Registrable Securities) initiating such registration
in proportion to the number of shares for which registration was
requested.  If the Company is required to
pay the Registration Expenses of a withdrawn offering pursuant to clause (a)
above, then such Holders shall not forfeit their rights pursuant to Section 2.3
to a demand registration.

2.7          Underwriting.  If any Holders initiating a registration
request hereunder (the “Initiating Holders”) intend to distribute the Registrable
Securities covered by their request by means of an underwriting pursuant to
Section 2.3 or Section 2.5, they shall so advise the Company as a part of their
request made pursuant to Section 2.3 or Section 2.5 and the Company shall
include such information in the written notice referred to in Section 2.3(a) or
Section 2.5(a) above, as applicable.  In
such event, the right of any Holder to include its Registrable Securities in
such registration shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable Securities in the
underwriting to the extent provided herein. 
All Holders proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the
Initiating Holders (which underwriter or underwriters shall be selected by a
majority of the Initiating Holders and shall be reasonably acceptable to the
Company (and with respect to the Company’s Initial Public Offering, the 

 

13

 

Holders holding not less
than sixty-six and two-thirds percent (66-2/3%) of those Senior Preferred
Registrable Securities then outstanding). 
Notwithstanding any other provision of Section 2.3 or of Section 2.5, if
the managing underwriter determines in good faith that marketing factors
require a limitation of the number of securities to be underwritten (including
Registrable Securities) and the managing underwriter so advises the Company in
writing (an “Underwriter
Cutback”),
then the Company shall so advise all Holders of Registrable Securities that
would otherwise be underwritten pursuant hereto, and the number of shares that
may be included in the underwriting shall be allocated in the following order
of priority:  first, to the Major Series
E Holders, but only until the Major Series E Holders have received an aggregate
amount equal to $75,000,000 (in one or more underwritten offerings) in respect
of their Registrable Securities included in underwritten offerings, taking into
account allocations to the Major Series E Holders from any prior underwritten
offerings; second, to Holders of Senior Preferred Registrable Securities, but
excluding the Major Series E Holders, on a pro rata basis
based on the total number of then outstanding shares of Senior Preferred
Registrable Securities held by such Holders requesting inclusion in such
offering (on an as-converted to Common Stock basis), but only until such
Holders have received an aggregate amount equal to $125,000,000 (in one or more
underwritten offerings) in respect of their Senior Preferred Registrable
Securities included in underwritten offerings, taking into account allocations
to such Holders from any prior underwritten offerings; third, to Holders of
Senior Preferred Registrable Securities allocated among such Holders on a pro rata basis based on (i) the dollar amount of the
original purchase prices paid to the Company by the original purchaser for the
Senior Preferred Registrable Securities held by each Holder requesting
inclusion in such offering compared to (ii) the aggregate dollar amount of
the original purchase prices paid to the Company by the original purchasers for
all the Senior Preferred Registrable Securities held by all such Holders
requesting inclusion in such offering; fourth, to the Holders of Series A
Preferred and Series A-2 Preferred on a pro rata basis
based on the total number of then outstanding shares of Series A Preferred or
Series A-2 Preferred of the Company held by such Holders (on an as-converted to
Common Stock basis); fifth, to the Company; and sixth, to any stockholder of
the Company (other than a Holder) on a pro rata basis
based on the total number of then outstanding shares of capital stock of the
Company held by such stockholder; provided, however, that no such reduction in an offering subject to
the provisions of Section 2.4 above shall reduce the number of shares of Senior
Preferred Registrable Securities held by Holders who have requested inclusion
of Registrable Securities to below twenty percent (20%) of the total amount of
shares included in such offering. 
Notwithstanding the foregoing, in no event will shares of any party
other than a Holder be included in such a registration without the written
consent of the Holders holding not less than (i) a majority of the Registrable
Securities then outstanding, (ii) sixty-six and two-thirds percent (66-2/3%) of
those Series B/C/D Registrable Securities then outstanding, and
(iii) sixty-six and two-thirds percent (66-2/3%) of those Series E
Registrable Securities then outstanding, if such inclusion would reduce the
number of shares that may be included by Holders.  If any Holder disapproves of the terms of any
such underwriting, such Holder may elect to withdraw therefrom by written
notice to the managing underwriter, delivered at least ten (10) business
days prior to the effective date of the registration statement.  Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration.  For any Holder that is a
partnership, limited partnership or corporation, the partners, limited
partners, retired partners, retired limited partners and stockholders of such
Holder, or the estates and family members of any such partners, limited
partners, retired partners, 

 

14

 

retired limited partners
and any trusts for the benefit of any of the foregoing persons shall be deemed
to be collectively a single “Holder,” and any pro rata
reduction with respect to such “Holder” shall be based upon the aggregate amount of shares
carrying registration rights (or upon the original purchase price of such
shares, as the case may be) owned by all entities and individuals included in
such “Holder,” as defined in this sentence.

If the registration
statement under which the Company gives notice under Section 2.4 is for an
underwritten offering, the Company shall so advise the Holders of Registrable Securities.  In such event, the right of any such Holder
to be included in a registration pursuant to Section 2.4 shall be conditioned
upon such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the extent provided
herein.  All Holders proposing to
distribute their Registrable Securities through such underwriting shall enter
into (directly or through a proxy, custodian or representative) an underwriting
agreement in customary form with the underwriter or underwriters reasonably
selected for such underwriting by the Company (which underwriter or
underwriters shall be reasonably acceptable to the Holders holding not less
than a majority of the Registrable Securities, sixty-six and two-thirds percent
(66-2/3%) of the Series B/C/D Registrable Securities and sixty-six and
two-thirds percent (66-2/3%) of the Series E Registrable Securities to the
extent such Holders are participating in such underwritten offering).  Notwithstanding any other provision contained
in this Agreement, if the managing underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten (including Registrable Securities), the number of shares that may
be included in the underwriting shall be allocated in the same order of
priority as provided in this Section 2.5 above, unless the registration is for
the Initial Public Offering, in which case the Registrable Securities held by
the Holders may be completely excluded if such exclusion is considered
necessary in the good faith judgment of the Board.  In no event will shares of any selling
stockholder other than a Holder be included in such registration without the
written consent of (i) a majority of the Registrable Securities then
outstanding, (ii) sixty-six and two-thirds percent (66-2/3%) of those Series
B/C/D Registrable Securities then outstanding, and (iii) sixty-six and
two-thirds percent (66-2/3%) of those Series E Registrable Securities then
outstanding, if such inclusion would reduce the number of shares that may be
included by Holders.  If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement.  Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration. 
For any Holder that is a partnership, limited partnership or
corporation, the partners, limited partners, retired partners, retired limited
partners and stockholders of such Holder, or the estates and family members of
any such partners, limited partners, retired partners, retired limited partners
and any trusts for the benefit of any of the foregoing persons shall be deemed
to be collectively a single “Holder,” and any pro rata
reduction with respect to such “Holder” shall be based upon the aggregate
amount of shares carrying registration rights owned by all entities and
individuals included in such “Holder,” as defined in this sentence.

 

15

 

2.8          Obligations of the Company.  Whenever required to effect the registration
of any Registrable Securities, the Company shall, as expeditiously as
reasonably possible:

(a)           In the case of registrations required under
Section 2.3 and 2.5, use its best efforts to prepare and file with the SEC a
registration statement with respect to such Registrable Securities (provided that before
filing a registration statement or prospectus or any amendments or supplements
thereto, the Company shall furnish legal counsel for the Holders with copies of
all such documents to be filed) and use all commercially reasonable efforts to
cause such registration statement to become effective, and keep such
registration statement effective for one hundred eighty (180) calendar days or
until the Holder or Holders have completed the distribution related thereto;

(b)           Prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement for
the period set forth in subsection (a) above;

(c)           Furnish to the Holders such
number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them;

(d)           Use its reasonable efforts
to register and qualify the securities covered by such registration statement
under Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holders (and to maintain such registrations and qualifications effective
for the applicable period of time set forth in Section 2.8(a) above, and to do
any and all other acts and things that may be necessary or advisable to enable
such Holders to consummate the disposition in such jurisdictions of such shares
(provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not be required but for this Section 2.8(d), (ii) subject itself to
taxation in any such jurisdiction or (iii) file any general consent to service
of process in any such jurisdiction));

(e)           In the event of any
underwritten public offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter(s) of such offering, and enter into such other customary agreements
and take all such actions (including, without limitation, effecting a stock
split or combination of shares) as such underwriter reasonably requests in
order to expedite or facilitate the disposition of such shares;

(f)            Cause all such Registrable
Securities registered pursuant hereunder to be listed on each securities
exchange on which similar securities issued by the Company are then listed (or,
if not then listed, on such exchange(s) as requested by a majority of the
participating Holders or, in the case of registrations pursuant to Section 2.3
above, the Initiating Holders);

(g)           Notify each Holder of
Registrable Securities covered by such registration statement at any time when
a prospectus relating thereto is required to be delivered under the 

 

16

 

Securities Act of the happening
of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.  The Company will use
commercially reasonable efforts to amend or supplement such prospectus in order
to cause such prospectus to not include any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;

(h)           Use commercially reasonable
efforts to furnish, on or about the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, copies of (i) the opinion, if any, of the lead legal
counsel representing the Company for the purposes of such registration issued pursuant
to the underwriting agreement relating to the offering and addressed to the
underwriters and (ii) the letter (including any “bring-downs” related thereto)
from the independent certified public accountants of the Company issued
pursuant to the underwriting agreement relating to the offering and addressed
to the underwriters;

(i)            Provide for a transfer agent
and registrar and CUSIP number for all such shares not later than the effective
date of such registration statement;

(j)            Make available for inspection
by any Holder, by any underwriter participating in any distribution pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any Holder or by any such underwriter all financing and other
records, pertinent corporate documents and properties (other than confidential
intellectual property and trade secrets of the Company) of the Company and
cause the Company’s officers, directors, employees and independent accountants
to supply all information reasonably requested by any such Holder, underwriter,
attorney, accountant or agent in connection with such registration statement;

(k)           Otherwise use its
commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least 12 months beginning with the first day of the Company’s first full
calendar quarter after the effective date of the registration statement, which
earnings statement shall satisfy in all respects the provisions of Section
11(a) of the Securities Act and Rule 158 promulgated thereunder;

(l)            Permit any Holder of
Registrable Securities, which Holder, in its sole reasonable judgment, might be
deemed to be an underwriter or a controlling person of the Company, to
participate in the preparation of such registration statement and to require
the insertion therein of material, furnished to the Company in writing, which
in the reasonable judgment of such Holder and its counsel should be included;

(m)          In the event of the issuance
of any stop order suspending the effectiveness of a registration statement, or
of any order suspending or preventing the use of any related prospectus or
suspending the qualification of any Registrable Securities included in such 

 

17

 

registration statement for
sale in any jurisdiction, the Company shall use its commercially reasonable
efforts to promptly obtain the withdrawal of such order; and

(n)           Use its commercially
reasonable efforts to, within the time periods required by applicable law, file
all documents and reports required to be filed with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, and to take any and all
other actions to ensure the availability of the use of Form S-3 to the Company
and the Holders.

2.9          Termination of Registration Rights.  A Holder’s
registration rights shall expire on the date that all Registrable Securities
held by and issuable to such Holder may be sold pursuant to Rule 144(k) under
the Securities Act, provided that
the Company has completed its Initial Public Offering and is subject to the
reporting requirements of the Exchange Act.

2.10        Furnishing Information.  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Section 2.3, 2.4 or
2.5 above that the selling Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as shall be required to
effect the registration of their Registrable Securities.

2.11        Indemnification.

(a)           The Company will indemnify and hold harmless
each Holder, each of its officers, directors and partners, legal counsel, and
accountants and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 2, and each
underwriter, if any, and each person who controls within the meaning of Section
15 of the Securities Act any underwriter, against all expenses, claims, losses,
damages, and liabilities (or actions, proceedings or settlements in respect
thereof) arising out of or based on (i) any untrue statement or alleged untrue
statement of a material fact contained in any prospectus, offering circular, or
other document, including any related registration statement, notification or
the like, incident to any such registration, qualification or compliance, or
(ii) any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, or (iii) any violation by the Company of the Securities Act or any
rule or regulation thereunder applicable to the Company and relating to action
or inaction required of the Company in connection with any such registration,
qualification or compliance, and will reimburse each such Holder, each of its
officers, directors, partners, legal counsel, and accountants and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling any such claim, loss,
damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission based upon written information furnished to the Company
by such Holder or underwriter and stated to be specifically for use
therein.  It is agreed that the indemnity
agreement contained in this Section 2.11(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld).

 

18

 

(b)           Each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors and officers, legal counsel and
accountants, and each underwriter, if any, of the Company’s securities covered
by such a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, each other
such Holder and each of its officers and directors, and each person controlling
such other Holder, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on (i) any untrue statement
or alleged untrue statement of a material fact by such Holder contained in any
such registration statement, prospectus, offering circular or other document,
or (ii) any omission or alleged omission to state therein by such Holder a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company and such Holders,
directors, officers, legal counsel, accountants, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder under an instrument duly executed by
such Holder and stated to be in furnished by such Holder specifically for use therein;
provided, however,
that the obligations of such Holder hereunder shall not apply to amounts paid
in settlement of any such claims, losses, damages or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld); and provided that in no event shall any indemnity under this
Section 2.11(b) exceed the net proceeds from the offering received by such
Holder.

(c)           Each party entitled to
indemnification under this Section 2.11 (the “Indemnified
Party”) shall give notice to the party required to provide
indemnification (the “Indemnifying Party”)
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to
assume the defense of such claim or any litigation resulting therefrom; provided, however, that
legal counsel for the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at such party’s expense; and provided  further, however, that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 2, to the extent such failure is not
prejudicial.  No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.  Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.

(d)           If the indemnification
provided for in this Section 2.11 is held by a court of competent jurisdiction
to be unavailable to an Indemnified Party with respect to any loss, 

 

19

 

liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of
indemnifying such Indemnified Party hereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations provided, however, that such contribution by such Indemnified Party
shall not in any event exceed an amount equal to the net proceeds to such
Indemnified Party (after deduction of all underwriters’ discounts and
commissions) from the disposition of the Registrable Securities disposed of by
such Indemnified Party pursuant to the registration, qualification or
compliance effected pursuant to this Section 2. 
The relative fault of the Indemnifying Party and of the Indemnified
Party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state
a material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and to parties’ relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omissions.

(e)           Notwithstanding the
foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with an underwritten public offering of the Company’s securities are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control, except with respect to the limitation on the indemnity
set forth in the last sentence of Section 2.11(b).

2.12        Transfer or Assignment of Registration Rights.  The rights to
cause the Company to register Registrable Securities pursuant to this Section 2
may be transferred or assigned by a Holder to a transferee or assignee of
Registrable Securities that (a) is a general partner, limited partner or
retired partner of a Holder that is a partnership or limited partnership; (b) is
a subsidiary or parent corporation (or any officer, director or principal
stockholder thereof) that owns all of the capital stock of the Holder; (c) is a
member or former member of any Holder that is a limited liability company; (d)
is a family member or a trust for the benefit of the Holder or such family
member; (e) is an Affiliate of the Holder; (f) is an Affiliated partnership,
limited liability company or fund managed by a Holder or any of their
respective directors, officers, partners or members; or (g) acquires not less
than 1,000,000 shares of Registrable Securities (as adjusted for stock
dividends, combinations, splits, recapitalizations and the like); provided, however, that
(i) the transferor shall, promptly after such transfer, furnish to the Company
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned
and (ii) such transferee shall agree to be subject to all restrictions set
forth in this Agreement.  Notwithstanding
the foregoing, any other provision of this Agreement or any other provision of
any other agreement among some or all of the parties hereto, 3i Technology
Partners L.P., Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3i Global
Technology 2004-06 L.P. and any 3i Permitted Transferee may, from time to time,
transfer all or any portion of the shares it owns to any 3i Permitted
Transferee; provided that in each such case the
transferee will agree in writing to be subject to the terms of this Agreement
to the same extent as if such transferee were an original Holder hereunder.

 

20

 

2.13        Amendment of Registration Rights.  Any provision
of this Section 2 may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and (i) the
holders of at least a majority of the Registrable Securities then outstanding (voting
together as a single class), (ii) the holders of at least a majority of the
Series B Preferred then outstanding (including shares of Common Stock issued
upon conversion of the Series B Preferred), (iii) holders of at least sixty
percent (60%) of the Series C Preferred then outstanding (including shares of
Common Stock issued upon conversion of the Series C Preferred),
(iv) holders of at least sixty-six and two-thirds percent (66-2/3%) of the
Series D Preferred then outstanding (including shares of Common Stock issued
upon conversion of the Series D Preferred) and (v) holders of at least
sixty-six and two-thirds percent (66-2/3%) of the Series E Preferred then
outstanding (including shares of Common Stock issued upon conversion of the
Series E Preferred).  Any amendment or
waiver effected in accordance with this Section 2.13 shall be binding upon each
Holder and the Company.

2.14        “Market Stand-Off” Agreement.

(a)           In connection with the Initial Public
Offering, each Holder hereby agrees that such Holder shall not sell, transfer,
make any short sale of, grant any option for the purchase of, enter into any
hedging or similar transaction with the same economic effect as a sale or
otherwise transfer or dispose of any Common Stock (or any other securities of
the Company) held by such Holder (other than those included in the
registration) for a period specified by the representative of the underwriters
of the Common Stock (or any other securities) of the Company not to exceed one
hundred eighty (180) calendar days following the effective date of a
registration statement of the Company filed under the Securities Act in
connection with such offering; provided, however, that all
current and future officers and directors of the Company and all current and
future holders of at least one percent (1%) of the Company’s outstanding voting
securities enter into similar agreements.

(b)           In connection with any
follow-on offering of the Company’s securities, each Series A Holder and Series
A-2 Holder hereby agrees that such Series A Holder and Series A-2 Holder shall
not sell, transfer, make any short sale of, grant any option for the purchase
of, enter into any hedging or similar transaction with the same economic effect
as a sale or otherwise transfer or dispose of any Common Stock (or any other
securities of the Company) held by such Series A Holder and Series A-2 Holder
(other than those included in the registration) for a period specified by the
representative of the underwriters of the Common Stock (or any other
securities) of the Company not to exceed ninety (90) calendar days following
the effective date of a registration statement of the Company filed under the
Securities Act in connection with such offering; provided,
however, that all current and future
officers and directors of the Company and all current and future holders of at
least five percent (5%) of the Company’s voting securities enter into similar
agreements.

(c)           Each Holder agrees to
execute and deliver such other agreements as may be reasonably requested by the
Company or the underwriter that are consistent with the Holder’s obligations
under this Section 2.14 or that are necessary to give further effect
thereto.  The obligations described in
this Section 2.14 shall not apply to a Special Registration Statement.  The Company may impose stop-transfer
instructions with respect to the shares of Common Stock 

 

21

 

(or any other securities)
subject to the foregoing restriction until the end of the relevant market
stand-off day period.

2.15        Rule 144 Reporting.  With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC that may
permit the sale of the Registrable Securities to the public without
registration after such time as a public market exists for the Common Stock,
the Company agrees to use its commercially reasonable efforts to:

(a)           Make and keep public
information available, as those terms are understood and defined in Rule 144,
at all times after the date that the Company becomes subject to the reporting
requirements of the Securities Act and the Exchange Act;

(b)           File with the SEC, in a
timely manner, all reports and other documents required of the Company under
the Exchange Act; and

(c)           So long as a Holder owns any
Registrable Securities required to bear the restrictive legends set forth in
Section 2.1 above, furnish to such Holder forthwith upon request:  (i) a written statement by the Company as to
its compliance with the reporting requirements of Rule 144, and of the Exchange
Act (at any time after it has become subject to such reporting requirements);
(ii) a copy of the most recent annual or quarterly report of the Company filed
with the SEC; and (iii) such other reports and documents as a Holder may
reasonably request in connection with availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without registration.

ARTICLE 3

COVENANTS OF THE COMPANY

3.1          Basic Financial Information and Reporting.

(a)           The Company will maintain true books and
records of account in which full and correct entries will be made of all their
business transactions pursuant to a system of accounting established and
administered in accordance with U.S. generally accepted accounting principles
consistently applied (“GAAP”), and will
set aside on their books all such proper accruals and reserves as shall be
required under GAAP.

(b)           The Company will maintain a
system of internal accounting controls similar to those maintained by
corporations of established reputation in the same or similar business.

(c)           As soon as reasonably
practicable after the end of each fiscal year, and in any event within ninety
(90) calendar days after the end of each such fiscal year, the Company will
furnish to each Holder of at least 2,000,000 shares of Registrable Securities
(as adjusted for any stock dividends, combinations, splits, recapitalizations
and the like) (a “Significant Holder”)
a consolidated balance sheet of the Company, as at the end of such fiscal year,
and a consolidated statement of income and a statement of cash flows of the
Company, for such year, all prepared in accordance with GAAP and setting forth
in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and audited and certified by 

 

22

 

independent public
accountants approved by the audit committee of the Board of Directors (which
shall be comprised solely of non-employee directors).

(d)           As soon as reasonably
practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within thirty (30)
calendar days after the end of each such quarter, the Company will furnish to
each Significant Holder a consolidated balance sheet of the Company as of the
end of each such quarterly period, and a consolidated statement of income and a
statement of cash flows of the Company for such period and for the current
fiscal year to date, all certified by the Company’s Chief Financial Officer
(or, if there is no such officer, the senior employee(s) responsible for the
accounting and financial statements of the Company), prepared in accordance
with GAAP (with the exception that no notes need be attached to such
statements, and year-end audit adjustments may not have been made) and setting
forth in each case in comparative form the figures from the corresponding
quarter and year-to-date periods of the previous fiscal year and from the
Budget and Operating Plan (defined below).

(e)           As soon as reasonably
practicable after each calendar month, and in any event within thirty (30)
calendar days after each such calendar month, the Company will furnish to each
Significant Holder a consolidated balance sheet of the Company as of the end of
each such monthly period, and a consolidated statement of income and a
statement of cash flows of the Company for such period and for the current
fiscal year to date, all certified by the Company’s Chief Financial Officer
(or, if there is no such officer, the senior employee(s) responsible for the
accounting and financial statements of the Company), prepared in accordance
with GAAP (with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made) and setting forth in
each case in comparative form the figures from the previous month and from the
Budget and Operating Plan.

(f)            The Company will furnish to
each Significant Holder at least thirty (30) calendar days prior to the
beginning of each fiscal year a consolidated annual budget and operating plan
for such fiscal year (and as soon as available, any subsequent written
revisions thereto) which shall be approved by the Board (the “Budget and Operating Plan”), and a
statement of income and a statement of cash flows of the Company for the
current fiscal year to date, including a comparison to the Budget and Operating
Plan figures for such current fiscal period, all certified by the Company’s
Chief Financial Officer (or, if there is no such officer, the senior employee(s)
responsible for the accounting and financial statements of the Company) and
prepared in accordance with GAAP, with the exception that no notes need be
attached to such statements and year-end audit adjustments may not have been
made.

(g)           In addition to the
information required to be reported pursuant to Section 3.14 below, the
Company shall provide notice of a Reportable Event (as hereinafter defined) as
soon as possible and in any event no later than five (5) days following the
occurrence of said event to each Significant Holder.  The following events shall be “Reportable Events”:

(i)            so long as such Significant
Holder has a right to designate a member or observer of the Board, the receipt
by the Company of an offer to buy a controlling interest in the capital stock
of the Company or a significant amount of its assets;

 

23

 

(ii)           receipt by the Company of
notice of the resignation or, subject to applicable laws, serious illness of
the Chief Executive Officer, the President, the Chief Financial Officer or the
Chief Operating Officer of the Company;

(iii)          the receipt by the Company
of a notice that the Company is in default under any loan agreement to which
the Company is a party; and

(iv)          the existence of any known
material default by the Company under this Agreement or any other Transaction
Document (as defined in the Purchase Agreement).

(h)           The Company shall provide
promptly any other information regarding the Company’s business to any
Significant Holder that reasonably requests such information.

3.2          Inspection Rights.  Each Significant Holder shall have the right,
upon reasonable advance notice, to visit and inspect any of the properties of
the Company, and to discuss the affairs, finances and accounts of the Company
with its officers, and to review and examine the books and records of the
Company and such other information as is reasonably requested, all during
normal business hours.  The Company shall
make its officers reasonably available to each Significant Holder during all
such visits and inspections.  Each
Significant Holder agrees to keep confidential and not misuse, and to use the
same degree of care as such Significant Holder uses to protect its own confidential
information, any Company information that the Company identifies as being
confidential or proprietary (so long as such information is not in the public
domain) that is obtained by such Significant Holder, except that such
Significant Holder may disclose such proprietary or confidential information
(i) to any partner, subsidiary, parent or such other agent of such Significant
Holder for the purpose of evaluating its investment in the Company as long as
such partner, subsidiary, parent or agent is advised of and bound to the
confidentiality provisions of this Section 3.2; (ii) at such time as it enters
the public domain through no fault of such Significant Holder; (iii) that is
communicated to such Significant Holder free of any obligation of
confidentiality; or (iv) that is developed by such Significant Holder or its
agents independently of and without reference to any confidential information
communicated by the Company.

3.3          Board Observation Right.

(a)           So long as Bain Capital owns
any capital stock of the Company, the Company shall invite one designated
representative of Bain Capital to attend and participate in all meetings of the
Board (including any meetings of committees of the Board) in a nonvoting
advisory capacity (the “Bain Capital Board
Observer”).  The Company shall
give such designated representative copies of all notices, minutes, consents
and other materials that it provides to its directors at the same time as such
materials are provided to the directors.

(b)           So long as NEA owns any
capital stock of the Company, the Company shall invite two designated
representatives of NEA to attend and participate in all meetings of the Board
(including any meetings of committees of the Board) in a nonvoting advisory
capacity (the “NEA Board Observers”),
one of whom shall initially be Mike O’Dell. 
The Company shall give such designated representatives copies of all
notices, minutes, consents and other materials that it provides to its
directors at the same time as such materials are provided to the directors.

 

24

 

(c)           So long as 3i owns any
capital stock of the Company, the Company shall invite one designated
representative of 3i to attend and participate in all meetings of the Board
(including any meetings of committees of the Board) in a nonvoting advisory
capacity (the “3i Board Observer”).  The Company shall give such designated
representatives copies of all notices, minutes, consents and other materials
that it provides to its directors at the same time as such materials are
provided to the directors.

(d)           So long as Meritech owns any
capital stock of the Company, the Company shall invite one designated
representative of Meritech to attend and participate in all meetings of the
Board (including any meetings of committees of the Board) in a nonvoting
advisory capacity (the “Meritech Board
Observer”).  The Company shall
give such designated representatives copies of all notices, minutes, consents
and other materials that it provides to its directors at the same time as such
materials are provided to the directors.

3.4          Directors’ Expenses.  The Company shall reimburse NEA, 3i, Meritech
and Bain Capital for all reasonable expenses incurred by the Series B Director,
the NEA Board Observers, the Series C Director, the 3i Board Observer, the
Meritech Board Observer, the Series D Director, the Series E Director and the
Bain Capital Board Observer in connection with attendance at Board meetings
(including any meetings of committees of the Board) and any other meetings or
events attended on behalf of the Company at the request of the Company’s Chief
Executive Officer or President.  The
Company shall not, however, pay any compensation to any of its directors for
their services as directors, except that the Company may elect to compensate
any independent director; provided, however, that any compensation to such independent directors
shall be approved by the compensation committee of the Board of Directors
(which shall be comprised solely of non-employee directors).

3.5          Board of Directors Meetings; Board Composition.

(a)           The Company shall hold at
least six (6) Board meetings during every calendar year, unless otherwise
approved by a majority of the Board.  All
committees of the Board shall be appointed by a vote of at least five members
of the Board, and the Series B Director, the Series C Director, the Series D
Director and the Series E Director shall each be given the option to serve on
any committee of the Board, including without limitation the compensation and
audit committees (each of which shall be comprised solely of non-employee
directors).

3.6          Insurance.

(a)           The Company shall maintain
directors’ and officers’ insurance through a carrier approved by, and on policy
terms reasonably acceptable to the Board (including the affirmative approval of
at least five directors) in an amount not less than $10,000,000.

(b)           In addition to the
foregoing, the Company shall maintain, for as long as any shares of Series B
Preferred, Series C Preferred, Series D Preferred and Series E Preferred shall
remain outstanding, directors’ and officers’ liability insurance to cover any
claims against directors or officers that the Company may incur in the amount
of not less than $10,000,000 

 

25

 

through a carrier and on
terms reasonably acceptable to NEA, 3i, Meritech and Bain Capital and where the
Company is the named beneficiary under such policy.

(c)           In addition to the
foregoing, the Company shall maintain key person life insurance covering the
life of Jeffrey Citron in the amount of $2,000,000 payable to the Company.

(d)           In addition to the
foregoing, the Company shall maintain, or shall cause to be maintained,
property, casualty and liability policies on such terms that are customary for
a company of the same size and in the same industry as the Company.

3.7          Reservation of Common Stock.  The Company will at all times reserve and
keep available, solely for issuance and delivery upon the conversion of the
Series Preferred, all Common Stock issuable from time to time upon such
conversion.

3.8          Option Grants; Stock Vesting; Stock Repurchase; Exercise Price.

(a)           The Stock Plan (as defined
in the Purchase Agreement) may be amended only with the approval of the Board,
subject to the approval requirements of the holders of Series B Preferred, Series
C Preferred, Series D Preferred and Series E Preferred contained in the
Restated Certificate.

(b)           Unless otherwise approved by
the Board (upon the recommendation of the compensation committee of the Board),
all stock options and other stock equivalents granted or issued on or after the
date of this Agreement to (i) employees (below the vice president level),
consultants, advisors and other service providers shall be subject to vesting
as follows:  twenty-five percent (25%) of
such stock shall vest at the end of each of the first four anniversaries
following the date of grant; provided that
the optionee continues to provide services throughout the end of each such
vesting period, and (ii) employees (at or above the vice president level) and
directors shall be subject to vesting as follows:  one forty-eighth (1/48th) of such stock shall
vest each month until the four (4) year anniversary of the date of grant; provided that the optionee continues to provide services
throughout the end of each such vesting period.

(c)           With respect to any shares
of stock purchased by any employees, directors, consultants, advisors and other
service providers on or after the date of this Agreement, the Company’s
repurchase option shall provide, unless otherwise approved by the Board (upon
the recommendation of the compensation committee of the Board), that upon such
person’s termination of employment or service with the Company, with or without
cause, the Company or its assignee (to the extent permitted by applicable
securities laws) shall have the option to purchase at the lower of cost and
fair market value any unvested shares of stock owned by such person.

3.9          Acceleration of Vesting.  Unless otherwise approved by the Board (upon
the recommendation of the compensation committee of the Board), on or after the
date of this Agreement, the Company shall not grant any stock option or stock
equivalent containing acceleration of vesting provisions.

 

26

3.10        Non-Competition Agreement and Confidential
Information and Invention Assignment Agreement.

(a)           The Company shall require all current and
future members of its senior management team to execute and deliver a
Non-Competition Agreement substantially in the form attached as Exhibit E to the
Purchase Agreement.

(b)           The Company shall require
all future officers, employees and consultants to execute and deliver a
Confidential Information and Invention Assignment Agreement substantially in
the form attached as Exhibit E to the Purchase Agreement; provided, however, that
such form may be amended with the approval of a majority of the Board.

3.11        Assignment of Right of First Refusal.  In the event
the Company elects not to exercise any right of first refusal or right of first
offer the Company may have on a proposed transfer of any of the Company’s
outstanding capital stock pursuant to the Company’s charter documents, bylaws,
by contract or otherwise, the Company shall, to the extent it may do so under
the relevant charter or bylaw provision or contract, assign such right of first
refusal or right of first offer to each Investor on a pro rata
basis.  In the event of such assignment,
each Investor shall have a right to purchase its pro rata portion of the
capital stock proposed to be transferred. 
Each Investor’s pro rata
portion shall be equal to the product obtained by multiplying (i) the aggregate
number of shares proposed to be transferred by (ii) a fraction, the numerator
of which is the number of shares of Registrable Securities held by such Investor
at the time of the proposed transfer and the denominator of which is the total
number of shares owned by all Investors at the time of such proposed
transfer.  To the extent of any conflict
between this Section 3.11 and the Third Amended and Restated Right of First
Refusal, Co-Sale and Voting Agreement by and among the Company and the
stockholders of the Company listed on the exhibits thereto dated on or about
the date of this Agreement (the “ROFR Agreement”),
the ROFR Agreement shall prevail.

3.12        Market Stand-Off Agreement.  The Company shall cause (i) all entities and
individuals that become stockholders of the Company after the Closing (as such
term is defined in the Purchase Agreement), (ii) all employees, executives,
consultants, advisors and other service providers to the Company who receive
stock options of the Company, and (iii) all persons and entities who receive
warrants for the Company’s capital stock to be bound by market stand-off
restrictions substantially similar to the market stand-off agreement contained
in Section 2.14 above.

3.13        Payment of Taxes, Compliance with Laws, etc.  The Company
will pay and discharge all lawful taxes, assessments and governmental charges
or levies imposed upon it or upon its income or property before the same shall
become overdue, as well as all lawful claims for labor, materials and supplies
which, if not paid when due, might become a lien or charge upon its property or
any part thereof; provided, however,
that the Company shall not be required to pay and discharge any such tax,
assessment, charge, levy, or claim so long as the validity thereof is being
contested by the Company in good faith by appropriate proceedings and an
adequate reserve therefor has been established on its books.  All transfer, excise or other taxes payable
to any jurisdiction (in the United States and outside of the United States)
and/or by reason of the sale or issuance of Series B Preferred Stock pursuant
to the Series B Preferred 

 

27

 

Purchase Agreement
(except for such taxes payable by reason of any subsequent transfer of the
Series B Preferred Stock) shall be paid or provided for by the Company.  All transfer, excise or other taxes payable
to any jurisdiction (in the United States and outside of the United States)
and/or by reason of the sale or issuance of Series C Preferred Stock pursuant
to the Series C Purchase Agreement (except for such taxes payable by reason of
any subsequent transfer of the Series C Preferred Stock) shall be paid or
provided for by the Company.  All
transfer, excise or other taxes payable to any jurisdiction (in the United
States and outside of the United States) and/or by reason of the sale or
issuance of Series D Preferred Stock pursuant to the Purchase Agreement (except
for such taxes payable by reason of any subsequent transfer of the Series D
Preferred Stock) shall be paid or provided for by the Company.  All transfer, excise or other taxes payable
to any jurisdiction (in the United States and outside of the United States)
and/or by reason of the sale or issuance of Series E Preferred Stock pursuant
to the Purchase Agreement (except for such taxes payable by reason of any
subsequent transfer of the Series E Preferred Stock) shall be paid or provided
for by the Company.  All United States
federal and state, and all other jurisdictions, income tax returns of the
Company for any period shall be prepared and signed by an independent
accounting firm acceptable to either (i) two-thirds of the Series B Holders,
the Series C Holders, the Series D Holders and the Series E Holders (whose
consent shall not be unreasonably withheld) (voting together as a single class
and on an as-converted to Common Stock basis) or (ii) the audit committee of
the Board of Directors (which shall be comprised solely of non-employee
directors).  The preparation of such
returns shall be at the Company’s expense. 
The Company will use all commercially reasonable efforts to comply with
all applicable laws and regulations in the conduct of its business including,
without limitation, all environmental laws.

3.14        Material Changes and Litigation.  The Company
will promptly notify each Series B Holder, Series C Holder, Series D Holder and
Series E Holder of any material adverse change in the business, properties,
assets or condition, financial or otherwise, of the Company or any subsidiary
and of any litigation or governmental or regulatory proceeding or investigation
pending or, to the best knowledge of the Company, threatened against the
Company or against any officer, director, any person in charge of a principal
business function or any other individual designated by the Board as a key
employee or principal stockholder of the Company or any subsidiary, materially
adversely affecting or which, if adversely determined, could materially
adversely affect its present or proposed business, properties, assets or
condition.

3.15        Qualified Small Business.  The Company will use reasonable efforts to
comply with the reporting and record-keeping requirements of Section 1202 of
the Internal Revenue Code of 1986, as amended (the “Code”), any regulations promulgated thereunder and any
similar state laws and regulations, and agrees not to repurchase any stock of
the Company if such repurchase would cause the Shares not to so qualify as “Qualified Small Business Stock,” so long as the Board determines that
it is in the best interests of and not unduly burdensome to the Company to
comply with the provisions of Section 1202 of the Code.

3.16        Real Property Holding Corporation.  The Company
shall provide prompt notice to NEA following any “determination date” (as
defined in Treasury Regulation Section 1.897-2(c)(1)) on which the Company
becomes a United States real property holding corporation.  In addition, upon a written request by NEA,
the Company shall provide NEA with a written statement informing NEA whether
NEA’s interest in the Company constitutes a United 

 

28

 

States real property
interest.  The Company’s determination shall
comply with the requirements of Treasury Regulation Section 1.897-2(h)(1) or
any successor regulation, and the Company shall provide timely notice to the
Internal Revenue Service, in accordance with and to the extent required by
Treasury Regulation Section 1.897-2(h)(2) or any successor regulation, that
such statement has been made.  The
Company’s written statement to NEA shall be delivered to NEA within 10 days of
NEA’s written request therefor.  The
Company’s obligation to furnish such written statement shall continue
notwithstanding the fact that a class of the Company’s stock may be regularly
traded on an established securities market or the fact that there is no
preferred stock then outstanding.

3.17        Management Compensation.  The Company shall not pay to its management
team compensation in excess of the compensation customarily paid to
management-level employees of companies of similar sizes, of similar
maturities, and in similar businesses of that of the Company without the
consent of the Compensation Committee (which shall be composed solely of non-employee
directors).

3.18        Enforcement of Bylaws.  For so long as the outstanding shares of
Series B Preferred (including shares of Common Stock issued or issuable upon
conversion of the Series B Preferred), Series C Preferred (including shares of
Common Stock issued or issuable upon conversion of the Series C Preferred),
Series D Preferred (including shares of Common Stock issued or issuable upon
conversion of the Series D Preferred) or Series E Preferred (including shares
of Common Stock issued or issuable upon conversion of the Series E Preferred)
represent at least one percent (1%) of the outstanding voting power of the
capital stock of the Company (calculated on an as-converted to Common Stock
basis), the Company and the Investors shall promptly take all corporate and
other actions necessary to enforce Section 3.17 of the Company’s by-laws
(relating to Board approval rights).

3.19        No Impairment.  The Company shall not take, or fail to take,
any action, or avoid or seek to avoid the observance or performance of any of
the terms of this Agreement to be observed or performed hereunder, but will at
all times in good faith assist in the carrying out of all the provisions of
this Agreement and in the taking of all action as may be necessary or
appropriate in order to protect the rights of the Investors hereunder.

3.20        Environmental Covenant.  The Company shall continue to comply in all
material respects with any applicable statute, law or regulation relating to the
environment or occupational health and safety and shall notify the Investors
promptly if the Company (or any of its subsidiaries) shall be in violation of
any such applicable statutes, laws or regulations.

3.21        Employment Covenant.  The Company shall continue to comply with any
applicable statute, law or regulation relating to equal employment opportunity
and other laws related to employment, including but not limited to, the health
and safety of such employees and any labor rights of such employees.

3.22        Board and Officer Covenant.  The Company shall deliver to each of its
officers and directors on the date hereof, and to each officer and director
appointed or elected after the date hereof, a notice, in the form attached
hereto as Exhibit B regarding Article XI of 

 

29

 

the Restated Certificate
in effect on the date hereof, or in the case of any such officer or director
appointed or elected after the date hereof, at the time of such appointment or
election.

3.23        Amended and Restated Certificate of Incorporation.  The Company
shall file an amendment to the Company’s Amended and Restated Certificate of
Incorporation within 60 days of the Closing Date (as such term is defined in
the Purchase Agreement) to reduce the number of authorized shares of Series E
Preferred (and reduce the corresponding number of shares of Common Stock) to
that number of shares of Series E Preferred that are then issued and
outstanding and all Investors agree to provide all necessary consents to enable
the Company to effect such actions.

3.24        Termination of Covenants; Assignment of Covenants.  Unless
terminated earlier pursuant to the terms and provisions hereof, the covenants
of the Company contained in this Section 3 shall terminate and be of no further
force and effect upon the consummation of an Initial Public Offering in which
all of the Series Preferred converts to Common Stock.  The rights of the Investors contained in this
Section 3 may be transferred or assigned by an Investor to a transferee or
assignee of the Shares that (a) is a general partner, limited partner or
retired partner of such Investor that is a partnership; (b) is a member or
former member of any Investor that is a limited liability company; (c) is a
family member or a trust for the benefit of the Investor or such family member,
(d) is a subsidiary or parent corporation (or any officer, director or
principal stockholder thereof) that owns all of the capital stock of the
Investor; (e) is an Affiliate of the Investor; (f) is an Affiliated
partnership, limited liability company or fund managed by an Investor or any of
their respective directors, officers, partners or members; or (g) acquires not
less than 1,000,000 Registrable Securities (as adjusted for stock dividends, combinations,
splits, recapitalizations and the like); provided, however, that (i) the transferor shall, within a reasonable
time after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such rights and obligations are being assigned and (ii) such transferee shall
agree in writing to be subject to all restrictions set forth in this
Agreement.  Notwithstanding the foregoing,
any other provision of this Agreement or any other provision of any other
agreement among some or all of the parties hereto, 3i Technology Partners L.P.,
Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3i Global Technology
2004-06 L.P. and any 3i Permitted Transferee may, from time to time, transfer
all or any portion of the shares it owns to any 3i Permitted Transferee; provided, that in each such case the transferee will agree
in writing to be subject to the terms of this Agreement to the same extent as
if such transferee were an original Holder hereunder.

ARTICLE 4

RIGHTS OF FIRST REFUSAL

4.1          Subsequent Offerings.  Each Series B Holder, Series C Holder, Series
D Holder and Series E Holder (each, a “Section 4 Holder”
and collectively, the “Section 4 Holders”)
shall have a right of first refusal to purchase its pro rata
share of all New Securities that the Company may, from time to time, propose to
sell and issue after the date of this Agreement.  Each Section 4 Holder’s pro rata
share is equal to the ratio of (a) the number of shares of Common Stock
(including all shares of Common Stock issuable or issued upon 

 

30

 

conversion of the Shares)
of which such Section 4 Holder is deemed to be a holder immediately prior to
the issuance of such New Securities to (b) the total number of shares of the
outstanding Common Stock (including all shares of Common Stock issued or
issuable upon conversion of the Shares, and excluding any shares of Common
Stock issuable upon exercise or conversion of any options, warrants or other
rights to purchase shares of Common Stock) immediately prior to the issuance of
the New Securities.

4.2          Exercise of Rights.  If the Company proposes to issue any New
Securities, it shall give each Section 4 Holder written notice of its
intention, describing the New Securities, the price and the terms and
conditions upon which the Company proposes to issue the same.  Each Section 4 Holder shall have twenty (20)
days from the receipt of such notice to agree to purchase its pro rata share of the New Securities for the price and upon
terms and conditions at least as favorable to the Company as those specified in
the notice by giving written notice to the Company and stating therein the
quantity of New Securities to be purchased. 
Notwithstanding the foregoing, the Company shall not be required to
offer or sell such New Securities to any Section 4 Holder who would cause the
Company to be in violation of applicable federal or state securities laws by
virtue of such offer or sale.

4.3          Issuance of New Securities to Other Persons.  If not all of
the Section 4 Holders elect to purchase their pro rata
share of the New Securities, then the Company shall promptly notify in writing
the Section 4 Holders who do so elect and shall offer such Section 4 Holders
the right to acquire such unsubscribed shares. 
Each such Section 4 Holder shall have ten (10) days after receipt
of such notice to notify the Company of its election to purchase all or a
portion thereof of the unsubscribed shares. 
If the Section 4 Holders fail to exercise in full the rights of first
refusal, the Company shall have ninety (90) days thereafter to sell the New
Securities in respect of which the Section 4 Holder’s rights were not
exercised, at a price and upon general terms and conditions not more favorable
to the purchasers thereof than specified in the Company’s notice to the Section
4 Holders pursuant to Section 4.2 hereof. 
If the Company has not sold such New Securities within ninety (90) days
of the notice provided pursuant to Section 4.2, the Company shall not
thereafter issue or sell any New Securities, without first offering such
securities to the Section 4 Holders in the manner provided above.

4.4          Termination and Waiver of Rights of First Refusal.  The rights of
first refusal established by this Section 4 shall not apply to, and shall
terminate upon an Initial Public Offering in which all of the Series Preferred
converts to Common Stock.  The rights of
first refusal established by this Section 4 may be amended, or any provision
waived, with the written consent of the Company and the Section 4 Holders
holding (i) at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of the Series B Preferred, Series C Preferred and Series D
Preferred then held by all Series B Holders, Series C Holders and Series D
Holders (including shares of Common Stock issuable or issued upon conversion of
the Series B Preferred, the Series C Preferred and Series D Preferred) and (ii)
sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of the
Series E Preferred then held by all Series E Holders (including shares of
Common Stock issuable or issued upon conversion of the Series E Preferred), or
as permitted by Section 5.1 below.

4.5          Transfer of Rights of First Refusal.  The rights of
first refusal of each Section 4 Holder under this Section 4 may be transferred
to the same parties, subject to the same 

 

31

 

restrictions, as any
transfer of the rights pursuant to Section 3.28 above.  For purposes of this Section 4, “Section 4 Holders” includes any general partners, limited
partners, members and affiliates of the Section 4 Holders.  Each Section 4 Holder shall be entitled to
apportion the right of first refusal hereby granted it among itself and its
general partners, limited partners, members and affiliates in such proportions
as it deems appropriate.  Notwithstanding
the foregoing, any other provision of this Agreement or any other provision of
any other agreement among some or all of the parties hereto, 3i Technology
Partners L.P., Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3i
Global Technology 2004-06 L.P.  and any
3i Permitted Transferee may, from time to time, transfer all or any portion of
the shares it owns to any 3i Permitted Transferee; provided,
that in each such case the transferee will agree in writing to be subject to
the terms of this Agreement to the same extent as if such transferee were an
original Holder hereunder.

4.6          Excluded Securities.  The defined term “New Securities” does not include shares of Common Stock
issued or issuable:

(a)           upon conversion of shares of
Series Preferred;

(b)           to officers, directors or
employees of, or consultants to, the Company pursuant to stock option or stock
purchase plans or agreements (including, for example, restricted stock award
agreements) on terms approved by the Board (upon the recommendation of the
compensation committee of the Board) up to an aggregate amount of 39,201,900
shares of Common Stock (as adjusted for stock dividends, combinations, splits,
recapitalizations and the like), including shares issued prior to the date of
this Agreement;

(c)           pursuant to a Qualified IPO
(as such term is defined in the Restated Certificate);

(d)           with the vote or written
consent of holders of at least (i) a majority of the outstanding shares of
Series B Preferred, (ii) sixty percent (60%) of the outstanding shares of
Series C Preferred, (iii) sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Series D Preferred and (iv) sixty-six and two-thirds
percent (66-2/3%) of the outstanding shares of Series E Preferred, each such
series voting separately as a distinct class;

(e)           pursuant to the acquisition
or licensing of technology by the Company or to a strategic partner of the
Company in connection with a corporate partnering transaction, each of which is
approved by the holders of at least sixty-six and two-thirds percent (66-2/3%)
of the then-outstanding shares of Series B Preferred, Series C Preferred,
Series D Preferred and Series E Preferred (voting together as a single class
and on an as-converted to Common Stock basis);

(f)            pursuant to an acquisition
of an unaffiliated corporation by the Company by merger, purchase of all or
substantially all of the assets or reorganization resulting in the ownership by
the Company of not less than 51% of the voting power of such corporation; or

(g)           to financial institutions or
lessors in connection with commercial credit arrangements, equipment
financings, commercial property lease transactions or similar transactions that
are approved by the holders of at least sixty-six and two-thirds percent (66-2/3%)
of the then-outstanding shares of Series B Preferred, Series C Preferred,
Series D 

 

32

 

Preferred and Series E
Preferred (voting together as a single class and on an as-converted to Common
Stock basis).

ARTICLE 5

MISCELLANEOUS

5.1          Amendment and Waiver.

(a)           Except as otherwise expressly provided, the
provisions of this Agreement may be amended, modified or waived only upon the
written consent of (i) the Company, (ii) the holders of at least a majority of
the Registrable Securities then outstanding, (iii) the holders of at least a
majority of the then-outstanding shares of Series B Preferred (including shares
of Common Stock issued upon conversion of the Series B Preferred), (iv) the
holders of at least sixty percent (60%) of the then outstanding shares of
Series C Preferred (including shares of Common Stock issued upon conversion of
the Series C Preferred), (v) the holders of at least sixty-six and two-thirds
percent (66-2/3%) of the then outstanding shares of Series D Preferred
(including shares of Common Stock issued upon conversion of the Series D
Preferred) and (vi) the holders of at least sixty-six and two-thirds
percent (66-2/3%) of the then outstanding shares of Series E Preferred
(including shares of Common Stock issued upon conversion of the Series E
Preferred); provided, however, that any
amendment, modification or waiver of a provision explicitly providing Bain
Capital, NEA, 3i or Meritech with a right or benefit shall also require the
separate written consent of Bain Capital, NEA, 3i or Meritech, as may be
applicable.

(b)           Any amendment or waiver
effected in accordance with this Agreement shall be binding upon each Investor
and Holder of Registrable Securities in accordance with the terms hereof.

5.2          Waiver of Preemptive Rights.  The Investors as holders of at least
sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of the
Series B Preferred, Series C Preferred and Series D Preferred hereby fully
waive on behalf of all Section 4 Holders their rights of first refusal,
including all notice provisions thereof, under Article IV of this Agreement and
Article IV of the Prior Agreement with respect to the issuance and sale of
shares of Series E Preferred Stock of the Company (and the Common Stock
issuable upon conversion thereof) at the first and any subsequent closing
pursuant to the Purchase Agreement as in effect on the date hereof.

5.3          Governing Law.  This Agreement shall be governed in all
respects by and construed under the internal laws of the State of Delaware as
such laws are applied to agreements that are entered into by and among Delaware
residents while located in Delaware and that are to be performed entirely
within Delaware, without regard to principles of conflicts of law.

5.4          Jurisdiction; Venue.  With respect to any disputes arising out of
or related to this Agreement, the parties consent to the exclusive jurisdiction
of, and venue in, the state courts in the City of Baltimore, in the State of
Maryland (or in the event of exclusive federal jurisdiction, the courts of the
District of Maryland).

 

33

 

5.5          Waiver of Jury Trial.  EACH OF THE PARTIES HERETO
HEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR OTHER
PROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHER
TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

5.6          Equitable Remedies.  The parties hereto agree that irreparable
harm would occur in the event that any of the agreements and provisions of this
Agreement were not performed fully by the parties hereto in accordance with
their specific terms or conditions or were otherwise breached, and that money
damages are an inadequate remedy for breach of this Agreement because of the
difficulty of ascertaining and quantifying the amount of damage that will be
suffered by the parties hereto in the event that this Agreement is not
performed in accordance with its terms or conditions or is otherwise
breached.  It is accordingly hereby
agreed that the parties hereto shall be entitled to an injunction or injunctions
to restrain, enjoin and prevent breaches of this Agreement by the other parties
and to enforce specifically such terms and provisions of this Agreement in any
court of the United States or any state having jurisdiction, such remedy being
in addition to and not in lieu of, any other rights and remedies to which the
other parties are entitled to at law or in equity.

5.7          Arbitration.  Regarding any dispute arising hereunder, the
parties hereto shall first attempt in good faith to resolve such dispute among
the applicable parties.  If such attempt
fails, then any dispute between or among the parties to this Agreement relating
to or in respect of this Agreement, its negotiation, execution performance,
subject matter, or any course of conduct or dealing or actions under or in
respect of this Agreement, shall be submitted to, and resolved exclusively
pursuant to arbitration in accordance with the commercial arbitration rules of
the American Arbitration Association (“AAA”) or the Judicial Arbitration and Mediation Services,
Inc. (“JAMS”). 
Such arbitration shall take place in Baltimore, Maryland, with one
mutually acceptable arbitrator presiding at such arbitration proceeding, and
shall be subject to the substantive law of the State of Delaware.  If after sixty (60) days the parties cannot
agree on an acceptable arbitrator, then the Chairman or other authorized AAA or
JAMS representative shall appoint an arbitrator.  Decisions pursuant to such arbitration shall
be final, conclusive and binding on the parties.  Upon the conclusion of arbitration, the parties
may apply to any state court of the State of Delaware, the United States
District Courts in the State of Delaware, any state court of the State of
Maryland or the United States District Courts in the District of Maryland to
enforce the decision pursuant to such arbitration.  ACCORDINGLY, EACH OF THE PARTIES HERETO
HEREBY WAIVES ITS RIGHT, IF ANY, TO A JURY TRIAL IN RESPECT OF SUCH DISPUTE.

5.8          Successors and Assigns.  Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time.

5.9          Entire Agreement.  This Agreement, the exhibits and schedules
hereto, the Purchase Agreement and the other documents delivered pursuant
thereto constitute the full and entire understanding and agreement among the
parties hereto, whether written or oral, with regard to the subjects hereof and
thereof, and no party shall be liable or bound to any other party 

 

34

 

in any manner with regard
to the subjects hereof or thereof by any warranties, representations or
covenants except as specifically set forth herein and therein.  Any previous agreements among the parties
relative to the specific subject matter hereof, including but not limited to
the Prior Agreement, are terminated and superseded by this Agreement.

5.10        Severability.  In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.

5.11        Delays or Omissions.  It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring.  It is further agreed that any waiver, permit,
consent or approval of any kind or character on any Holder’s part of any
breach, default or noncompliance under this Agreement or any waiver on such
Holder’s part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in
such writing.  All remedies, either under
this Agreement, by law, or otherwise afforded to Holders, shall be cumulative
and not alternative.

5.12        Notices.  All notices and other communications required
or permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, sent by facsimile or otherwise:

(a)           if to Bain Capital, at Bain Capital’s address
or facsimile number set forth on the Schedule of Investors attached hereto as Exhibit A or as shown in
the Company’s records, as may be updated in accordance with the provisions
hereof;

(b)           if to NEA, at NEA’s address
or facsimile number set forth on the Schedule of Investors attached hereto as Exhibit
A or as shown in the Company’s records, as may be updated in accordance
with the provisions hereof, and addressed to the attention of Louis Citron,
Esq., with a copy to Trevor J.  Chaplick,
Esq., Wilson Sonsini Goodrich & Rosati, P.C., Two Fountain Square, 11921
Freedom Drive, Reston, Virginia 20190;

(c)           if to any other Holder, at
such address or facsimile number as shown in the Company’s records, or, until any
such Holder so furnishes an address or facsimile number to the Company, then to
and at the address of the last Holder of the Registrable Securities in question
for which the Company has contact information in its records; or

(d)           if to the Company, one copy
should be sent to its address or facsimile number set forth on the signature
pages hereof and addressed to the attention of the Chief Executive Officer, or
at such other address or facsimile number as the Company shall have furnished
to the Investors, with a copy to Robinson Markel, Esq., Katten Muchin Zavis
Rosenman, 575 Madison Avenue, New York, New York 10022.

 

35

 

Each such notice or other
communication shall for all purposes of this Agreement be treated as effective
or as having been given:  (a) upon
delivery, if personally delivered; (b) three (3) business days after pre-paid
deposit for next business day delivery with a commercial courier service (e.g., DHL or FedEx); (c) five (5) business days after
deposit, postage pre-paid, with first class airmail (which airmail must be
certified or registered); or (d) upon confirmation of facsimile transfer when
sent by facsimile.

5.13        Attorneys’ Fees.  In the event that any arbitration, suit or
action is instituted to enforce any provision in this Agreement, the prevailing
party in such dispute shall be entitled to recover from the losing party all
fees, costs and expenses of enforcing any right of such prevailing party under
or with respect to this Agreement, including, without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all reasonable fees, costs and expenses of appeals.

5.14        Titles and Subtitles.  The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.

5.15        Limitation on Subsequent Rights.  After the date
of this Agreement, for so long as the outstanding shares of Series B Preferred
(including the Common Stock issued or issuable upon conversion of the Series B
Preferred), outstanding shares of Series C Preferred (including the Common
Stock issued or issuable upon conversion of the Series C Preferred),
outstanding shares of Series D Preferred (including the Common Stock issued or
issuable upon conversion of the Series D Preferred) or outstanding shares of
Series E Preferred (including the Common Stock issued or issuable upon
conversion of the Series E Preferred) represent at least 1% of the outstanding
voting power of the capital stock of the Company (calculated on an as-converted
to Common Stock basis), the Company shall not (a) without the prior written
consent of (x) the holders of at least a majority of the Registrable Securities
then outstanding, (y) the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the shares of Series B Preferred, Series C Preferred and Series D
Preferred then outstanding (voting together as a single class and including
shares of Common Stock issuable or issued upon conversion of the Series B
Preferred, the Series C Preferred and the Series D Preferred), and (z) the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the shares of
Series E Preferred then outstanding enter into any agreement with any holder or
prospective holder of any securities of the Company that would grant such
holder Rights of First Refusal, information rights, registration rights or any
other rights contained in this Agreement on a parity with or senior to those
granted to the Holders hereunder or (b) without the prior written consent
of (x) the holders of at least a majority of the Registrable Securities then
outstanding, (y) the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the shares of Series B Preferred, Series C Preferred and Series D
Preferred then outstanding (voting together as a single class and including
shares of Common Stock issuable or issued upon conversion of the Series B
Preferred, the Series C Preferred and the Series D Preferred) and (z) the
holders of at least sixty-six and two-thirds percent (66-2/3%) of the shares of
Series E Preferred then outstanding, enter into any agreement with any holder
or prospective holder of any securities of the Company which would allow such
holder or prospective holder (i) to include such securities in any registration
filed under Section 2.3, Section 2.4 or Section 2.5 hereof, unless under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the 

 

36

 

inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (ii) to make a demand registration.

5.16        Additional Investors.  Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Series E
Preferred pursuant to the Purchase Agreement, any purchaser of such shares of
Series E Preferred may become a party to this Agreement by executing and
delivering an additional counterpart signature page to this Agreement and shall
be deemed an “Investor,” a “Holder” and a party hereunder.

5.17        Non-Business Days.  Notwithstanding anything to the contrary
contained herein, in the event that any calendar day referred to in this
Agreement falls on a Saturday, a Sunday or a U.S. holiday (each a “Non-Business Day”), then any transaction or notice that
must be effected or delivered on such a Non-Business Day will instead be
required to be effected or delivered on the next day that is not a Non-Business
Day.

5.18        Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.

5.19        Telecopy Execution and Delivery.  A facsimile,
telecopy or other reproduction of this Agreement may be executed by one or more
parties hereto, and an executed copy of this Agreement may be delivered by one
or more parties hereto by facsimile or similar electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective
for all purposes.  At the request of any
party hereto, all parties hereto agree to execute an original of this Agreement
as well as any facsimile, telecopy or other reproduction hereof.

5.20        Aggregation of Stock.  All shares of Registrable Securities held or
acquired by affiliated entities or persons or persons or entities under common
management or control shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.

 

37

IN WITNESS WHEREOF, the
parties hereto have executed this Third Amended and Restated Investors’ Rights
Agreement as of the date set forth in the first paragraph hereof.

	
   

  	
   

  	
   

  	
  “COMPANY”

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  VONAGE HOLDINGS CORP.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  /s/ Jeffrey Citron

  	
   

  
	
   

  	
   

  	
   

  	
  Jeffrey Citron

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Address:

  	
  2147 Route 27

  
	
   

  	
   

  	
   

  	
   

  	
  Edison, NJ 08817

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
									

 

38

	
   

  	
  “INVESTORS”

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BAIN CAPITAL VENTURE FUND 2005, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Bain Capital Venture Partners 2005, L.P.,

  
	
   

  	
   

  	
  its General Partner

  	
   

  
	
   

  	
  By:

  	
  Bain Capital Venture Investors, LLC,

  
	
   

  	
   

  	
  its General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Krupka

  	
   

  
	
   

  	
   

  	
  Name: Michael A. Krupka

  	
   

  
	
   

  	
   

  	
  Title: Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SANKATY
  CREDIT OPPORTUNITIES, L.P.

  
	
   

  	
  By:

  	
  Sankaty Credit
  Opportunities Investors, LLC,

  	
   

  
	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
  By:

  	
  Sankaty Credit Member,
  LLC,

  	
   

  
	
   

  	
   

  	
  the managing member of the
  general partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan S. Lavine

  	
   

  
	
   

  	
   

  	
  Name: Jonathan S. Lavine

  	
   

  
	
   

  	
   

  	
  Title: Managing Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  SANKATY
  CREDIT OPPORTUNITIES II, L.P.

  
	
   

  	
  By:

  	
  Sankaty Credit
  Opportunities Investors II, LLC,

  
	
   

  	
   

  	
  its general partner

  	
   

  
	
   

  	
  By:

  	
  Sankaty Credit Member,
  LLC,

  	
   

  
	
   

  	
   

  	
  the managing member of the
  general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan S. Lavine

  	
   

  
	
   

  	
   

  	
  Name: Jonathan S. Lavine

  	
   

  
	
   

  	
   

  	
  Title: Managing Director

  	
   

  
					

 

39

 

	
   

  	
  PROSPECT
  HARBOR CREDIT PARTNERS, L.P.

  
	
   

  	
  By:

  	
  Prospect Harbor Investors,
  LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
  By:

  	
  Sankaty Credit Member,
  LLC,

  
	
   

  	
   

  	
  the managing member of the
  general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jonathan S. Lavine

  
	
   

  	
   

  	
  Name: Jonathan S. Lavine

  
	
   

  	
   

  	
  Title:  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  BROOKSIDE
  CAPITAL PARTNERS FUND, L.P.

  
	
   

  	
  By:

  	
  Brookside Capital
  Investors, L.P.,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
  By:

  	
  Brookside Capital
  Management, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Domenic J. Ferrante

  
	
   

  	
   

  	
  Name: Domenic J. Ferrante

  
	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  BCIP ASSOCIATES III, LLC

  
	
   

  	
  By:

  	
  BCIP Associates III,

  
	
   

  	
  its sole member and manager

  
	
   

  	
   

  
	
   

  	
  BCIP ASSOCIATES III-B, LLC

  
	
   

  	
  By:

  	
  BCIP Associates III-B,

  
	
   

  	
  its sole member and manager

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Bain Capital Investors, LLC

  
	
   

  	
  their Managing Partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael A. Krupka

  
	
   

  	
   

  	
  Name: Michael A. Krupka

  
	
   

  	
   

  	
  Title: Authorized Person

  
	
   

  	
   

  	
   

  
	
   

  	
  RGIP, LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Bradford Malt

  
	
   

  	
   

  	
  Name: R. Bradford Malt

  
	
   

  	
   

  	
  Title: Managing Member

  

 

40

	
   

  	
  NEW ENTERPRISE ASSOCIATES 11, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  NEA Partners 11, L.P., its General Partner

  
	
   

  	
  By:

  	
  NEA 11 GP, LLC, its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eugene A. Trainor, III

  
	
   

  	
   

  	
  Name: Eugene A. Trainor, III

  	
   

  
	
   

  	
   

  	
  Title: Manager

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEW ENTERPRISE ASSOCIATES 10, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  NEA Partners 10, L.P., its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eugene A. Trainor, III

  
	
   

  	
   

  	
  Name: Eugene A. Trainor, III

  	
   

  
	
   

  	
   

  	
  Title: General Partner

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  NEA VENTURES 2003, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Pamela J. Clark

  
	
   

  	
   

  	
  Pamela J. Clark, Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ryan D. Drant

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Charles M. Linehan

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

41

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE BOARD OF TRUSTEES OF THE LELAND STANFORD
  JUNIOR UNIVERSITY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3I TECHNOLOGY PARTNERS L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  3i Technology Associates
  LLC, its general partner

  
	
   

  	
   

  	
  By:

  	
  3i Technology Corporation,
  its manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ J. Sanford Miller

  
	
   

  	
   

  	
   

  	
  Name: J. Sanford Miller

  
	
   

  	
   

  	
   

  	
  Title: Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MAYFLOWER
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signed on behalf of
  Mayflower L.P.

  
	
   

  	
   

  	
  acting by its manager, 3i
  Investments plc, by

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3i
  PAN EUROPEAN TECHNOLOGY

  
	
   

  	
   

  	
  2004-06
  L.P.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signed on behalf of 3i Pan
  European Technology

  2004-06 L.P.

  
	
   

  	
   

  	
  acting by its manager, 3i
  Investments plc, by

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/

  
	
   

  	
   

  	
  Authorized
  Signatory

  
						

 

42

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3i
  GLOBAL TECHNOLOGY 2004-06 L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signed on behalf of 3i
  Global Technology 2004-06

  
	
   

  	
   

  	
  L.P.

  	
   

  
	
   

  	
   

  	
  acting by its manager, 3i
  Investments plc, by

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ 

  
	
   

  	
   

  	
  Authorized
  Signatory

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MERITECH
  CAPITAL PARTNERS II L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Meritech Capital
  Associates II L.L.C

  
	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
  By:

  	
  Meritech Management
  Associates II L.L.C.

  
	
   

  	
   

  	
   

  	
  a managing member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Paul S. Madera

  
	
   

  	
   

  	
   

  	
  Paul S. Madera, a managing
  member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MERITECH
  CAPITAL AFFILIATES II L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Meritech Capital Associates II L.L.C.

  
	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
  By:

  	
  Meritech Management Associates II L.L.C.

  
	
   

  	
   

  	
   

  	
  a managing member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Paul S. Madera

  
	
   

  	
   

  	
   

  	
  Paul S. Madera, a managing
  member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MCP ENTREPRENEUR PARTNERS II
  L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Meritech Capital Associates II L.L.C.

  
	
   

  	
   

  	
   

  	
  its General Partner

  
	
   

  	
   

  	
  By:

  	
  Meritech Management Associates II L.L.C

  
	
   

  	
   

  	
   

  	
  a managing member

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Paul S. Madera

  
	
   

  	
   

  	
   

  	
  Paul S. Madera, a managing member

  
					

 

43

 

	
   

  	
   

  	
  INSTITUTIONAL
  VENTURE PARTNERS X, L.P.

  
	
   

  	
   

  	
  By:

  	
  Institutional Venture Management X, LLC

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ D.P.

  
	
   

  	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INSTITUTIONAL
  VENTURE PARTNERS X

  
	
   

  	
   

  	
  GMBH
  & CO. BETEILIGUNGS KG

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Institutional Venture Management X, LLC

  
	
   

  	
   

  	
  Its:

  	
  Managing Limited Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ D.P.

  
	
   

  	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INSTITUTIONAL
  VENTURE PARTNERS XI, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Institutional Venture Management XI, LLC

  
	
   

  	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ D.P.

  
	
   

  	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  

 

44

 

	
   

  	
   

  	
  INSTITUTIONAL
  VENTURE PARTNERS XI

  GMBH
  & CO. BETEILIGUNGS KG

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  Institutional Venture Management XI, LLC

  
	
   

  	
   

  	
  Its:

  	
  Managing Limited Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ D.P.

  
	
   

  	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

45

 

	
   

  	
  /s/ Jeffrey Citron

  
	
   

  	
  Jeffrey Citron

  
	
   

  	
   

  
	
   

  	
  /s/ Daniel J. Bemis

  
	
   

  	
  Daniel J. Bemis

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Rene Benedetto

  
	
   

  	
   

  
	
   

  	
  /s/ John M. Breech

  
	
   

  	
  John M. Breech

  
	
   

  	
   

  
	
   

  	
  /s/ Marc Byron

  
	
   

  	
  Marc Byron

  
	
   

  	
   

  
	
   

  	
  /s/ Cynthia Capone

  
	
   

  	
  Cynthia Capone

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Todd P. Corbett

  
	
   

  	
   

  
	
   

  	
  /s/ Edward J. Couri

  
	
   

  	
  Edward J. Couri

  
	
   

  	
   

  
	
   

  	
  /s/ Morton David

  
	
   

  	
  Morton David

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Michael DeBiase

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Liberato DeCicco

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Sekar Desamangalam

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Bruce Eatroff

  
	
   

  	
   

  
	
   

  	
  /s/ I. Steven Edelson

  
	
   

  	
  I. Steven Edelson

  
	
   

  	
   

  
	
   

  	
  /s/ Thomas R. Elkins

  
	
   

  	
  Thomas R. Elkins

  
	
   

  	
   

  
	
   

  	
  /s/ Grenn S. Eisen

  
	
   

  	
  Grenn S. Eisen

  
	
   

  	
   

  
	
   

  	
  /s/ David J. Fiszor

  
	
   

  	
  David J. Fiszor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Peter C. Gerhard

  
	
   

  	
   

  
	
   

  	
  /s/ Phil Giordano

  
	
   

  	
  Phil Giordano

  
	
   

  	
   

  
	
   

  	
  /s/ John Glade

  
	
   

  	
  John Glade

  
	
   

  	
   

  
	
   

  	
  /s/ John J. Gorman

  
	
   

  	
  John J. Gorman

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Kenneth Hanau

  
	
   

  	
   

  
	
   

  	
  /s/ Afzal Martin Hakimdin

  
	
   

  	
  Afzal Martin Hakimdin

  

 

46

 

	
   

  	
   

  
	
   

  	
  Louis B. Holder

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Mark Holodnak

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Peter A. Hurwitz

  
	
   

  	
   

  
	
   

  	
  /s/

  
	
   

  	
  JMM PHLP Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  J2 Partners, L.P.

  
	
   

  	
   

  
	
   

  	
  /s/ Dennis H. and Daryl B. Kraus

  
	
   

  	
  Dennis H. and Daryl B. Kraus

  
	
   

  	
   

  
	
   

  	
  Lake Travis Ventures, LLC

  
	
   

  	
  By:

  	
   /s/ Christopher Yeoman

  
	
   

  	
  Christopher Yeoman

  
	
   

  	
   

  
	
   

  	
  /s/ Jonathan Lamensdorf

  
	
   

  	
  Jonathan Lamensdorf

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Ken Laputka

  
	
   

  	
   

  
	
   

  	
  /s/ Louis Mamakos

  
	
   

  	
  Louis Mamakos

  
	
   

  	
   

  
	
   

  	
  /s/ Robinson Markel

  
	
   

  	
  Robinson Markel

  
	
   

  	
   

  
	
   

  	
  /s/ Stephen P. McDermott

  
	
   

  	
  Stephen P. McDermott

  
	
   

  	
   

  
	
   

  	
  /s/ Bruce Nakfoor

  
	
   

  	
  Bruce Nakfoor

  
	
   

  	
   

  
	
   

  	
  /s/ Emily A. Nakfoor

  
	
   

  	
  Emily A. Nakfoor

  
	
   

  	
   

  
	
   

  	
  /s/ Karen Nakfoor

  
	
   

  	
  Karen Nakfoor

  
	
   

  	
   

  
	
   

  	
  Trust f/b/o Grey Emil
  Nakfoor

  
	
   

  	
   

  
	
   

  	
  /s/ Katie Nehra

  
	
   

  	
  Katie Nehra

  
	
   

  	
   

  
	
   

  	
  /s/ Lauren Nehra

  
	
   

  	
  Lauren Nehra

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Robert B. Nolan, Jr.

  
	
   

  	
   

  
	
   

  	
  /s/ Ben D. Orlanski

  
	
   

  	
  Ben D. Orlanski

  
	
   

  	
   

  
	
   

  	
  /s/ Joseph Parent

  
	
   

  	
  Joseph Parent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Nicholas Picciolo

  

 

47

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Michael Porta

  
	
   

  	
   

  
	
   

  	
  /s/ Michael Poster

  
	
   

  	
  Michael Poster

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Ronald A. Purpora

  
	
   

  	
   

  
	
   

  	
  /s/ Jay Rappaport

  
	
   

  	
  Jay Rappaport

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  John Rego

  
	
   

  	
   

  
	
   

  	
  /s/ Douglas Rhoten

  
	
   

  	
  Douglas Rhoten

  
	
   

  	
   

  
	
   

  	
  /s/ Kerry Ritz

  
	
   

  	
  Kerry Ritz

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Brooke Schulz

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Mona Shah

  
	
   

  	
   

  
	
   

  	
  /s/ Jeffrey Stambovsky

  
	
   

  	
  Jeffrey Stambovsky

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Joshua C. Tanzer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Michael Tribolet

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Steven Van Saders

  
	
   

  	
   

  
	
   

  	
  /s/ Joann M. Vought

  
	
   

  	
  Joann M. Vought

  
	
   

  	
   

  
	
   

  	
  /s/ Thomas J. Vought

  
	
   

  	
  Thomas J. Vought

  
	
   

  	
   

  
	
   

  	
  /s/ Joshua S. Wanderer

  
	
   

  	
  Joshua S. Wanderer

  
	
   

  	
   

  
	
   

  	
  /s/ Craig Wert, Jr.

  
	
   

  	
  Craig Wert, Jr.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Neil Wrightington

  
	
   

  	
   

  
	
   

  	
  /s/ David S. Wu

  
	
   

  	
  David S. Wu

  

 

48

 

	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Philip Giordano

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Christopher Murray

  
	
   

  	
   

  
	
   

  	
   

  

 

49Exhibit 10.20

 

VONAGE
HOLDINGS CORP. 

2006 INCENTIVE PLAN

 

1.                                      Purposes of the Plan

 

The
purposes of the Plan are to (a) promote the long-term success of the
Company and its Subsidiaries and to increase stockholder value by providing
Eligible Persons with incentives to contribute to the long-term growth and
profitability of the Company by offering them an opportunity to obtain a
proprietary interest in the Company through the grant of equity-based other
incentive awards and (b) assist the Company in attracting, retaining and
motivating highly qualified individuals who are in a position to make
significant contributions to the Company and its Subsidiaries.

 

2.                                      Definitions and Rules of Construction

 

(a)                                  Definitions. For purposes of the Plan, the
following capitalized words shall have the meanings set forth below:

 

“Affiliate” means any
Parent or Subsidiary and any person that directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, the Company.

 

“Annual Award” means
an Award granted pursuant to Section 11 of the Plan.

 

“Award” means an
Option, Restricted Stock, Restricted Stock Unit, Stock Appreciation Right,
Performance Stock, Performance Unit, Annual Award or Other Award granted by the
Committee pursuant to the terms of the Plan.

 

“Award Document” means
an agreement, certificate or other type or form of document or
documentation approved by the Committee that sets forth the terms and
conditions of an Award. An Award Document may be in written, electronic or
other media, may be limited to a notation on the books and records of the
Company and, unless the Committee requires otherwise, need not be signed by a
representative of the Company or a Participant.

 

“Beneficial Owner” has
the meaning set forth in Rule 13d-3 under the Exchange Act.

 

“Board” means the
Board of Directors of the Company, as constituted from time to time.

 

“Change of Control” means:

 

(i)                                     Any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 30 percent or
more of the combined voting power of the Company’s then outstanding securities;
or

 

 

(ii)                                  The following individuals cease for any
reason to constitute a majority of the number of directors then serving:
individuals who, on the Effective Date, constitute the Board and any new
director (other than a director whose initial assumption of office is in
connection with an actual or threatened election contest, including, but not
limited to, a consent solicitation, relating to the election of directors of
the Company) whose appointment or election by the Board or nomination for
election by the Company’s stockholders was approved or recommended by a vote of
at least a majority of the directors then still in office who either were
directors on the Effective Date or whose appointment, election or nomination
for election was previously so approved or recommended; or

 

(iii)                               There is consummated a merger or
consolidation of the Company or any Subsidiary with any other corporation,
other than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
Subsidiary of the Company, more than 50 percent of the combined voting power of
the securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 30 percent or
more of the combined voting power of the Company’s then outstanding securities;
or

 

(iv)                              The stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the company of all or
substantially all of the Company’s assets, other than a sale or disposition by
the Company of all or substantially all of the Company’s assets to an entity,
more than 50 percent of the combined voting power of the voting securities of
which are owned by stockholders of the Company in substantially the same
proportions as their ownership of the Company immediately prior to such sale.

 

Notwithstanding the foregoing, to the extent that
any Award the payment or settlement of which will accelerate upon a Change of
Control provides for a “deferral of compensation” within the meaning of Section 409A
of the Code, no event set forth herein shall constitute a Change of Control for
purposes of the Plan or any Award Document unless such event also constitutes a
“change in ownership,” “change in effective control,” or “change in the
ownership of a substantial portion of the Company’s assets” within the meaning
of Section 409A of the Code.

 

“Code” means the
Internal Revenue Code of 1986, as amended, and the applicable rulings and
regulations promulgated thereunder.

 

2

 

“Committee” means the
Compensation Committee of the Board, any successor committee thereto or any
other committee appointed from time to time by the Board to administer the
Plan, which committee shall meet the requirements of Section 162(m) of the
Code, Section 16(b) of the Exchange Act and the applicable rules of
the Exchange; provided, however,
that, if any Committee member is found not to have met the qualification
requirements of Section 162(m) of the Code and Section 16(b) of
the Exchange Act, any actions taken or Awards granted by the Committee shall
not be invalidated by such failure to so qualify.

 

“Common Stock” means
the common stock of the Company or such other class of share or other
securities as may be applicable under Section 14 of the Plan.

 

“Company” means Vonage
Holdings Corp., a Delaware corporation, or any successor to all or
substantially all of the Company’s business that adopts the Plan.

 

“Effective Date” means
the effective date of the initial public offering of the Company.

 

“Eligible Persons”
means the individuals or entities described in Section 4(a) of the
Plan who are eligible for Awards under the Plan.

 

“Exchange”
means the New York Stock Exchange or such other securities exchange or
quotation system on which the Company may be listed from time to time.

 

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

 

“Fair Market Value”
means, with respect to a share of Common Stock, the fair market value thereof
as of the relevant date of determination, as determined in accordance with the
valuation methodology approved by the Committee. In the absence of any
alternative valuation methodology approved by the Committee, the Fair Market
Value of a share of Common Stock shall equal the closing selling price of a
share of Common Stock on the trading day immediately preceding the date on
which such valuation is made as reported on the Exchange or such other
securities exchange or quotation system as may be designated by the Committee
(or, if there were no such sales on such date, such closing selling price for
the most recent day during which a sale occurred).

 

“Incentive Stock Option”
means an Option that is intended to comply with the requirements of Section 422
of the Code or any successor provision thereto.

 

“Non-Employee
Director” means any member of the Board who is not an officer or
employee of the Company or any Subsidiary.

 

“Nonqualified Stock Option”
means an Option that is not intended to comply with the requirements of Section 422
of the Code or any successor provision thereto.

 

3

 

“Option” means an
Incentive Stock Option or Nonqualified Stock Option granted pursuant to Section 7
of the Plan.

 

“Other Award” means any form of
Award other than an Option, Restricted Stock, Restricted Stock Unit, Stock
Appreciation Right, Performance Stock, Performance Unit or Annual Award granted
pursuant to Section 12 of the Plan.

 

“Parent” means a
corporation that owns or beneficially owns a majority of the outstanding voting
stock or voting power of the Company. Notwithstanding the above, with respect
to an Incentive Stock Option, Parent shall have the meaning set forth in Section 424(e) of
the Code.

 

“Participant” means an
Eligible Person who has been granted an Award under the Plan.

 

“Performance Goal”
means the performance measures established by the Committee, from among the
performance criteria provided in Section 6(h) of the Plan, and set
forth in the applicable Award Document.

 

“Performance Period”
means the period established by the Committee and set forth in the applicable
Award Document over which Performance Goals are measured.

 

“Performance Stock”
means a Target Number of Shares granted pursuant to Section 10(a) of
the Plan.

 

“Performance Unit”
means a right to receive a Target Number of Shares or cash in the future
granted pursuant to Section 10(b) of the Plan.

 

“Permitted Transferees” means (i) a Participant’s
family member, (ii) one or more trusts established in whole or in part for
the benefit of one or more of such family members, (iii) one or more
entities which are beneficially owned in whole or in part by one or more
such family members, or (iv) a charitable or not-for-profit organization.

 

“Person” means any
person, entity or “group” within the meaning of Section 13(d)(3) or Section 14(d)(2) of
the Exchange Act, except that such term shall not include (i) the Company
or any of its Subsidiaries, (ii) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
Affiliates, (iii) an underwriter temporarily holding securities pursuant
to an offering of such securities, (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same proportions
as their ownership of stock of the Company, or (v) a person or group as
used in Rule 13d-1(b) under the Exchange Act.

 

“Plan” means this
Vonage Holdings Corp. 2006 Incentive Plan, as amended or restated from time to
time.

 

“Plan Limit” means the maximum aggregate number of Shares that
may be issued for all purposes under the Plan as set forth in Section 5(a) of the Plan.

 

4

 

“Plan
Year”
means the fiscal year of the Company or, if different, the calendar year, as
determined by the Committee.

 

“Prior
Plan”
means the 2001 Stock Incentive Plan of Vonage Holdings Corp.

 

“Restricted
Stock”
means one or more Shares granted or sold pursuant to Section 9(a) of
the Plan.

 

“Restricted
Stock Unit” means a right to receive one or more Shares (or cash, if applicable) in
the future granted pursuant to Section 9(b) of the Plan.

 

"Retirement Plan" means the
Vonage 401(k) Retirement Plan or any Successor thereto.

 

“Shares” means shares
of Common Stock, as may be adjusted pursuant to Section 14 of the
Plan.

 

“Stock Appreciation Right”
means a right to receive all or some portion of the appreciation on Shares
granted pursuant to Section 8 of the Plan.

 

“Subsidiary” means (i) a
corporation or other entity with respect to which the Company, directly or
indirectly, has the power, whether through the ownership of voting securities,
by contract or otherwise, to elect at least a majority of the members of such
corporation’s board of directors or analogous governing body, or (ii) any other
corporation or other entity in which the Company, directly or indirectly, has
an equity or similar interest and which the Committee designates as a
Subsidiary for purposes of the Plan. Notwithstanding the above, with respect to
an Incentive Stock Option, Subsidiary” shall have the meaning set forth in Section 424(f) of
the Code.

 

“Substitute
Award” means any Award granted upon assumption of, or in
substitution or exchange for, outstanding employee equity awards previously
granted by a company or other entity acquired by the Company or with which the
Company combines pursuant to the terms of an equity compensation plan that was
approved by the stockholders of such company or other entity.

 

“Target Number” or “Target Payment” means
the target number of Shares or cash value established by the Committee and set
forth in the applicable Award Document.

 

(b)                                 Rules of Construction. The masculine pronoun shall be
deemed to include the feminine pronoun, and the singular form of a word
shall be deemed to include the plural form, unless the context requires
otherwise. Unless the text indicates otherwise, references to sections are to
sections of the Plan.

 

3.                                      Administration

 

(a)                                  Committee. The Plan shall be administered
by the Committee, which shall have full power and authority, subject to the
express provisions hereof, to:

 

(i)                                     select
the Participants from the Eligible Persons;

 

5

 

(ii)                                  grant
Awards in accordance with the Plan;

 

(iii)                               determine
the number of Shares subject to each Award or the cash amount payable in
connection with an Award;

 

(iv)                              determine
the terms and conditions of each Award, including, without limitation, those
related to term, permissible methods of exercise, vesting, cancellation,
payment, settlement, exercisability, Performance Periods, Performance Goals,
and the effect, if any, of a Participant’s termination of employment with the
Company or any of its Subsidiaries or, subject to Section 6(d), a Change of
Control of the Company;

 

(v)                                 subject
to Sections
17 and 18(e), amend the terms and conditions of an Award after
the granting thereof;

 

(vi)                              specify
and approve the provisions of the Award Documents delivered to Participants in
connection with their Awards;

 

(vii)                           construe
and interpret any Award Document delivered under the Plan;

 

(viii)                        make
factual determinations in connection with the administration or interpretation
of the Plan;

 

(ix)                                adopt,
prescribe, amend, waive and rescind administrative regulations, rules and
procedures relating to the Plan;

 

(x)                                   employ
such legal counsel, independent auditors and consultants as it deems desirable
for the administration of the Plan and to rely upon any advice, opinion or
computation received therefrom;

 

(xi)                                vary
the terms of Awards to take account of tax and securities law and other
regulatory requirements or to procure favorable tax treatment for Participants;

 

(xii)                             correct
any defects, supply any omission or reconcile any inconsistency in any Award
Document or the Plan; and

 

(xiii)                          make
all other determinations and take any other action desirable or necessary to
interpret, construe or implement properly the provisions of the Plan or
any Award Document.

 

(b)                                 Plan Construction and
Interpretation.
The Committee shall have full power and authority, subject to the express
provisions hereof, to construe and interpret the Plan.

 

(c)                                  Determinations of Committee
Final and Binding.
All determinations by the Committee in carrying out and administering the Plan
and in construing and interpreting the Plan shall be made in the Committee’s
sole discretion and shall be final, binding and conclusive for all purposes and
upon all persons interested herein.

 

6

 

(d)                                 Delegation of Authority. To the extent not prohibited
by applicable laws, rules and regulations, the Committee may, from time to
time, delegate some or all of its authority under the Plan to a subcommittee or
subcommittees thereof or other persons or groups of persons as it deems
necessary, appropriate or advisable under such conditions or limitations as it may set
at the time of such delegation or thereafter; provided,
however, that the Committee may not
delegate its authority (i) to make Awards to employees (A) who are
subject on the date of the Award to the reporting rules under Section 16(a) of
the Exchange Act, (B) whose compensation for such fiscal year may be
subject to the limit on deductible compensation pursuant to Section 162(m)
of the Code or (C) who are officers of the Company who are delegated
authority by the Committee hereunder, or (ii) pursuant to Section 17
of the Plan. For purposes of the Plan, reference to the Committee shall be
deemed to refer to any subcommittee, subcommittees, or other persons or groups
of persons to whom the Committee delegates authority pursuant to this Section 3(d).

 

(e)                                  Liability of Committee. Subject to applicable laws, rules and
regulations:  (i) no member of the
Board or Committee (or its delegates) shall be liable for any good faith action
or determination made in connection with the operation, administration or
interpretation of the Plan and (ii) the members of the Board or the
Committee (and its delegates) shall be entitled to indemnification and
reimbursement in the manner provided in the Company’s Certificate of Incorporation
as it may be amended from time to time. In the performance of its
responsibilities with respect to the Plan, the Committee shall be entitled to
rely upon information and/or advice furnished by the Company’s officers or
employees, the Company’s accountants, the Company’s counsel and any other party
the Committee deems necessary, and no member of the Committee shall be liable
for any action taken or not taken in reliance upon any such information and/or
advice.

 

(f)                                    Action by the Board. Anything in the Plan to the
contrary notwithstanding, subject to applicable laws, rules and
regulations, any authority or responsibility that, under the terms of the Plan,
may be exercised by the Committee may alternatively be exercised by
the Board.

 

4.                                      Eligibility

 

(a)                                  Eligible Persons. Awards may be granted to
officers, employees, directors, Non-Employee Directors, consultants, advisors
and independent contractors of the Company or any of its Subsidiaries or joint
ventures, partnerships or business organizations in which the Company or its
Subsidiaries have an equity interest; provided,
however, that only employees of
the Company or a Parent or Subsidiary may be granted Incentive Stock
Options. The Committee shall have the authority to select the persons to whom
Awards may be granted and to determine the type, number and terms of
Awards to be granted to each such Participant. Under the Plan, references to “employment”
or “employed” include the engagement of Participants who are consultants,
advisors and independent contractors of the Company or its Subsidiaries and the
service of Participants who are Non-Employee Directors, except for purposes of
determining eligibility to be granted Incentive Stock Options.

 

(b)                                 Grants to Participants. The Committee shall have no
obligation to grant any Eligible Person an Award or to designate an Eligible
Person as a Participant solely by reason of

 

7

 

such Eligible Person having received a prior
Award or having been previously designated as a Participant. The Committee may grant
more than one Award to a Participant and may designate an Eligible Person
as a Participant for overlapping periods of time.

 

5.                                      Shares Subject to the Plan

 

(a)                                  Plan Limit. Subject to adjustment in
accordance with Section 14, the maximum aggregate number of Shares that may be
issued for all purposes under the Plan (the ”Plan Limit”) shall be equal to
(x) 15 percent of (1) the number of issued and outstanding Shares, from
time to time, divided by (2) 0.85, less (y) the number of Shares that are
available for issuance under the Prior Plan. In addition, following termination
of the Prior Plan, the Plan Limit shall be increased by the number of any
remaining Shares available for issuance under the Prior Plan or that become available
for issuance upon cancellation or expiration, without exercise or settlement,
of awards under the Prior Plan. Shares to be issued under the Plan may be
authorized and unissued shares, issued shares that have been reacquired by the
Company (in the open-market or in private transactions) and that are being held
in treasury, or a combination thereof.

 

(b)                                 Rules Applicable to
Determining Shares Available for Issuance. The number of Shares remaining available for issuance will
be reduced by the number of Shares subject to outstanding Awards and, for
Awards that are not denominated by Shares, by the number of Shares actually
delivered upon settlement or payment of the Award. For purposes of determining
the number of Shares that remain available for issuance under the Plan, (i) the
number of Shares that are tendered by a Participant or withheld by the Company
to pay the exercise price of an Award or to satisfy the Participant’s tax
withholding obligations in connection with the exercise or settlement of an
Award and (ii) all of the Shares covered by a stock-settled Stock
Appreciation Right, to the extent exercised, will not be added back to the Plan
Limit. In addition, for purposes of determining the number of Shares that
remain available for issuance under the Plan, the number of Shares
corresponding to Awards under the Plan that are forfeited or cancelled or
otherwise expire for any reason without having been exercised or settled or
that is settled through issuance of consideration other than Shares (including,
without limitation, cash) shall be added back to the Plan Limit and again be
available for the grant of Awards; provided,
however, that this provision
shall not be applicable with respect to (i) the cancellation of a Stock
Appreciation Right granted in tandem with an Option upon the exercise of the
Option or (ii) the cancellation of an Option granted in tandem with a
Stock Appreciation Right upon the exercise of the Stock Appreciation.

 

(c)                                  Special Limits. Anything to the contrary in Section 5(a) notwithstanding,
but subject to adjustment under Section 14, the following special limits
shall apply to Shares available for Awards under the Plan:

 

(i)                                     the
maximum number of Shares that may be issued pursuant to awards of
Incentive Stock Options shall equal 20,000,000 Shares;

 

8

 

(ii)                                  the
maximum number of Shares that may be issued pursuant to Options and Stock
Appreciation Rights granted to any Eligible Person in any calendar year shall
equal 10,000,000 Shares;

 

(iii)                               the
maximum amount that may be paid pursuant to Annual Awards granted to any
Eligible Person in any calendar year is $5,000,000; and

 

(iv)                              the
maximum amount that may be paid and the maximum number of Shares that may be
issued pursuant to Awards (other than those Awards set forth in Section 5(c)(ii) and
5(c)(iii)) that may be awarded to any Eligible Person in any calendar year
is $10,000,000 (with respect to Awards denominated in cash) or 10,000,000
Shares (with respect to Awards denominated in Shares).

 

(d)                                 Any Shares underlying Substitute Awards shall
not be counted against the number of Shares remaining for issuance and shall
not be subject to Section 5(c).

 

6.                                      Awards in General

 

(a)                                  Types of Awards. Awards under the Plan may consist
of Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Performance Stock, Performance Units, Annual Awards and Other Awards. Any
Award described in Sections 7 through 12 may be granted singly or in
combination or tandem with any other Award, as the Committee may determine.
Awards under the Plan may be made in combination with, in replacement of,
or as alternatives to awards or rights under any other compensation or benefit
plan of the Company, including the plan of any acquired entity.

 

(b)                                 Terms Set Forth in Award
Document. The
terms and conditions of each Award shall be set forth in an Award Document in a
form approved by the Committee for such Award, which Award Document shall
contain terms and conditions not inconsistent with the Plan. Notwithstanding
the foregoing, and subject to applicable laws, the Committee may accelerate
(i) the vesting or payment of any Award, (ii) the lapse of
restrictions on any Award or (iii) the date on which any Award first
becomes exercisable. The terms of Awards may vary among Participants, and
the Plan does not impose upon the Committee any requirement to make Awards
subject to uniform terms. Accordingly, the terms of individual Award
Documents may vary.

 

(c)                                  Termination of Employment. The Committee shall specify at
or after the time of grant of an Award the provisions governing the disposition
of an Award in the event of a Participant’s termination of employment with the
Company or any of its Subsidiaries. Subject to applicable laws, rules and
regulations, in connection with a Participant’s termination of employment, the
Committee shall have the discretion to accelerate the vesting, exercisability
or settlement of, eliminate the restrictions and conditions applicable to, or
extend the post-termination exercise period of an outstanding Award. Such
provisions may be specified in the applicable Award Document or determined
at a subsequent time.

 

(d)                                 Change of Control. (i)  The Committee shall
have full authority to determine the effect, if any, of a Change of Control of
the Company or any Subsidiary on
the vesting, exercisability, settlement, payment or lapse of restrictions
applicable to an Award, which effect

 

9

 

may be specified in the applicable Award
Document or determined at a subsequent time. Subject to applicable laws, rules and
regulations, the Board or the Committee shall, at any time prior to, coincident
with or after the effective time of a Change of Control, take such actions as
it may consider appropriate, including, without limitation:  (A) providing for the acceleration of
any vesting conditions relating to the exercise or settlement of an Award or
that an Award shall terminate or expire unless exercised or settled in full on
or before a date fixed by the Committee; (B) making such adjustments to
the Awards then outstanding as the Committee deems appropriate to reflect such
Change of Control; (C) causing the Awards then outstanding to be assumed,
or new rights substituted therefor, by the surviving corporation in such Change
of Control; or (D) permitting or requiring Participants to surrender
outstanding Options and Stock Appreciation Rights in exchange for a cash
payment equal to the difference between the highest price paid for a Share in
the Change of Control transaction and the Exercise Price of the Award.

 

(ii)                                  Subject
to applicable laws, rules and regulations, the Committee may provide,
in an Award Document or subsequent to the grant of an Award, for the
accelerated vesting, exercisability and/or the deemed attainment of a
Performance Goal with respect to an Award upon specified events similar to a
Change of Control.

 

(iii)                               Notwithstanding
any other provision of the Plan or any Award Document, the provisions of this Section 6(d) may not
be terminated, amended, or modified upon or after a Change of Control in a
manner that would adversely affect a Participant’s rights with respect to an
outstanding Award without the prior written consent of the Participant. Subject
to Section 17, the Board, upon recommendation of the Committee, may terminate,
amend or modify this Section 6(d) at any time and from time to time
prior to a Change of Control.

 

(e)                                  Dividends and Dividend
Equivalents. The
Committee may provide Participants with the right to receive dividends or
payments equivalent to dividends or interest with respect to an outstanding
Award, which payments can either be paid currently or deemed to have been
reinvested in Shares, and can be made in Shares, cash or a combination thereof,
as the Committee shall determine; provided,
however, that the terms of any
reinvestment of dividends must comply with all applicable laws, rules and
regulations, including, without limitation, Section 409A of the Code. Notwithstanding
the foregoing, no dividends or dividend equivalents shall be paid with respect
to Options or Stock Appreciation Rights.

 

(f)                                    Fractional Shares. No fractional Shares shall be
issued or delivered pursuant to any Award under the Plan. The Committee shall
determine whether cash, Awards, or other property shall be issued or paid in
lieu of fractional Shares, or whether such fractional Shares or any rights
thereto shall be forfeited or otherwise eliminated.

 

(g)                                 Rights of a Stockholder. A Participant shall have no
rights as a stockholder with respect to Shares covered by an Award (including
voting rights) until the date the Participant or his nominee becomes the holder
of record of such Shares. No adjustment shall be made for dividends or other
rights for which the record date is prior to such date, except as provided in Section 14.

 

(h)                                 Performance-Based Awards. (i) The Committee may determine
whether any Award under the Plan is intended to be “performance-based
compensation” as that term is used

 

10

 

in Section 162(m) of the Code. Any such
Awards designated to be “performance-based compensation” shall be conditioned
on the achievement of one or more Performance Goals to the extent required by Section 162(m)
of the Code and will be subject to all other conditions and requirements of Section 162(m).
The Performance Goals will be comprised of specified levels of one or more of
the following performance measures as the Committee deems appropriate:  net earnings or net income (before or after
taxes); earnings per share; net sales or revenue growth; net operating profit;
return measures (including, but not limited to, return on assets, capital,
equity, sales, or revenue); cash flow (including, but not limited to, operating
cash flow, free cash flow, cash flow return on equity, and cash flow return on
investment); earnings before or after taxes, interest, depreciation, and/or
amortization; gross or operating margins; productivity ratios; share price
(including, but not limited to, growth measures and total shareholder return);
expense targets; margins; operating efficiency; market share; customer
satisfaction; working capital targets; cash value added; economic value added;
market penetration; and product introductions. in each case determined in
accordance with generally accepted accounting principles (subject to
modifications approved by the Committee) consistently applied on a business
unit, divisional, subsidiary or consolidated basis or any combination thereof. The
Performance Goals may be described in terms of objectives that are related
to the individual Participant or objectives that are Company-wide or related to
a Subsidiary, division, department, region, function or business unit and may be
measured on an absolute or cumulative basis or on the basis of percentage of improvement
over time, and may be measured in terms of Company performance (or
performance of the applicable Subsidiary, division, department, region,
function or business unit) or measured relative to selected peer companies or a
market or other index. In addition, for Awards not intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, the Committee may establish
Performance Goals based on other criteria as it deems appropriate.

 

(ii)                                  The Participants will be designated, and the
applicable Performance Goals will be established, by the Committee within 90
days following the commencement of the applicable Performance Period (or such
earlier or later date permitted or required by Section 162(m) of the Code).
Each Participant will be assigned a Target Number or Target Payment payable if
Performance Goals are achieved. Any payment of an Award granted with
Performance Goals shall be conditioned on the written certification of the
Committee in each case that the Performance Goals and any other material
conditions were satisfied. The Committee may determine,
at the time of Award grant, that if performance exceeds the specified
Performance Goals, the Award may be settled with payment greater than the
Target Number or Target Payment, but in no event may such payment exceed
the limits set forth in Section 5(c). The Committee retains the right to
reduce any Award notwithstanding the attainment of the Performance Goals.

 

(i)                                     Deferrals. In accordance with the
procedures authorized by, and subject to the approval of, the Committee,
Participants may be given the opportunity to defer the payment or
settlement of an Award to one or more dates selected by the Participant; provided, however,
that the terms of any deferrals must comply with all applicable laws, rules and
regulations, including, without limitation, Section 409A of the Code. No
deferral opportunity shall exist with respect to an Award unless explicitly
permitted by the Committee on or after the time of grant.

 

11

 

(j)                                     Repricing of Options and Stock
Appreciation Rights.
Notwithstanding anything in the Plan to the contrary, an Option or Stock
Appreciation Right shall not be granted in substitution for a previously
granted Option or Stock Appreciation Right being canceled or surrendered as a
condition of receiving a new Award, if the new Award would have a lower
exercise price than the Award it replaces, nor shall the exercise price of an
Option or Stock Appreciation Right be reduced once the Option or Stock
Appreciation Right is granted. The foregoing shall not (i) prevent
adjustments pursuant to Section 14 or (ii) apply to grants of
Substitute Awards.

 

7.                                      Terms and Conditions of Options

 

(a)                                  General. The Committee, in its
discretion, may grant Options to Eligible Persons and shall determine
whether such Options shall be Incentive Stock Options or Nonqualified Stock
Options. Each Option shall be evidenced by an Award Document that shall
expressly identify the Option as an Incentive Stock Option or Nonqualified
Stock Option, and be in such form and contain such provisions as the
Committee shall from time to time deem appropriate.

 

(b)                                 Exercise Price. The exercise price of an
Option shall be fixed by the Committee at the time of grant or shall be determined
by a method specified by the Committee at the time of grant. In no event shall
the exercise price of an Option be less than 100 percent of the Fair Market
Value of a Share on the date of grant; provided,
however that the exercise price
of a Substitute Award granted as an Option shall be determined in accordance
with Section 409A of the Code and may be less than 100 percent of the
Fair Market Value.

 

(c)                                  Term. An Option shall be effective
for such term as shall be determined by the Committee and as set forth in the
Award Document relating to such Option, and the Committee may extend the
term of an Option after the time of grant; provided,
however, that the term of an
Option may in no event extend beyond the tenth anniversary of the date of
grant of such Option.

 

(d)                                 Exercise; Payment of Exercise
Price. Options
shall be exercised by delivery of a notice of exercise in a form approved
by the Company. Subject to the provisions of the applicable Award Document, the
exercise price of an Option may be paid (i) in cash or cash
equivalents, (ii) by actual delivery or attestation to ownership of freely
transferable Shares already owned by the person exercising the Option, (iii) by
a combination of cash and Shares equal in value to the exercise price, (iv) through
net share settlement or similar procedure involving the withholding of Shares
subject to the Option with a value equal to the exercise price or (v) by
such other means as the Committee may authorize.

 

(e)                                  Incentive Stock Options. The exercise price per Share
of an Incentive Stock Option shall be fixed by the Committee at the time of
grant or shall be determined by a method specified by the Committee at the time
of grant, but in no event shall the exercise price of an Incentive Stock Option
be less than 100 percent of the Fair Market Value of a Share on the date of
grant. No Incentive Stock Option may be issued pursuant to the Plan to any
individual who, at the time the Incentive Stock Option is granted, owns stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries,

 

12

 

unless (i) the exercise price determined
as of the date of grant is at least 110 percent of the Fair Market Value on the
date of grant of the Shares subject to such Incentive Stock Option and (ii) the
Incentive Stock Option is not exercisable more than five years from the date of
grant thereof. No Participant shall be granted any Incentive Stock Option that
would result in such Participant receiving a grant of Incentive Stock Options
that would have an aggregate Fair Market Value in excess of $100,000,
determined as of the time of grant, and that would be exercisable for the first
time by such Participant during any calendar year. No Incentive Stock Option may be
granted under the Plan after the tenth anniversary of the date on which the
Plan is adopted by the Board. The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions of Section 422
of the Code, or any successor provision thereto, as amended from time to time.

 

8.                                      Terms and Conditions of Stock Appreciation
Rights

 

(a)                                  General. The Committee, in its
discretion, may grant Stock Appreciation Rights to Eligible Persons. A
Stock Appreciation Right shall entitle a Participant to receive, upon
satisfaction of the conditions to payment specified in the applicable Award
Document, an amount equal to the excess, if any, of the Fair Market Value on
the exercise date of the number of Shares for which the Stock Appreciation
Right is exercised over the grant price for such Stock Appreciation Right
specified in the applicable Award Document. The grant price per share of Shares
covered by a Stock Appreciation Right shall be fixed by the Committee at the
time of grant or, alternatively, shall be determined by a method specified by
the Committee at the time of grant, but in no event shall the grant price of a
Stock Appreciation Right be less than 100 percent of the Fair Market Value of a
Share on the date of grant; provided,
however, that the grant price of
a Substitute Award granted as a Stock Appreciation Rights shall be in
accordance with Section 409A of the Code and may be less than 100
percent of the Fair Market Value. Payments to a Participant upon exercise of a
Stock Appreciation Right may be made in cash or Shares, having an
aggregate Fair Market Value as of the date of exercise equal to the excess, if
any, of the Fair Market Value on the exercise date of the number of Shares for
which the Stock Appreciation Right is exercised over the grant price for such
Stock Appreciation Right. The term of a Stock Appreciation Right settled in
Shares shall not exceed ten years.

 

(b)                                 Stock Appreciation Rights in
Tandem with Options.
A Stock Appreciation Right granted in tandem with an Option may be granted
either at the same time as such Option or subsequent thereto. If granted in
tandem with an Option, a Stock Appreciation Right shall cover the same number
of Shares as covered by the Option (or such lesser number of shares as the
Committee may determine) and shall be exercisable only at such time or
times and to the extent the related Option shall be exercisable, and shall have
the same term as the related Option. The grant price of a Stock Appreciation
Right granted in tandem with an Option shall equal the per-share exercise price
of the Option to which it relates. Upon exercise of a Stock Appreciation Right
granted in tandem with an Option, the related Option shall be canceled
automatically to the extent of the number of Shares covered by such exercise;
conversely, if the related Option is exercised as to some or all of the shares
covered by the tandem grant, the tandem Stock Appreciation Right shall be
canceled automatically to the extent of the number of Shares covered by the
Option exercise.

 

13

 

9.                                      Terms and Conditions of Restricted Stock and
Restricted Stock Units

 

(a)                                  Restricted Stock. The Committee, in its
discretion, may grant or sell Restricted Stock to Eligible Persons. An
Award of Restricted Stock shall consist of one or more Shares granted or sold
to an Eligible Person, and shall be subject to the terms, conditions and
restrictions set forth in the Plan and established by the Committee in
connection with the Award and specified in the applicable Award Document. Restricted
Stock may, among other things, be subject to restrictions on transferability,
vesting requirements or other specified circumstances under which it may be
canceled.

 

(b)                                 Restricted Stock Units. The Committee, in its
discretion, may grant Restricted Stock Units to Eligible Persons. A
Restricted Stock Unit shall entitle a Participant to receive, subject to the
terms, conditions and restrictions set forth in the Plan and the applicable
Award Document, one or more Shares. Restricted Stock Units may, among other
things, be subject to restrictions on transferability, vesting requirements or
other specified circumstances under which they may be canceled. If and
when the cancellation provisions lapse, the Restricted Stock Units shall become
Shares owned by the applicable Participant or, at the sole discretion of the
Committee, cash, or a combination of cash and Shares, with a value equal to the
Fair Market Value of the Shares at the time of payment.

 

10.                               Terms and Conditions of Performance Stock and
Performance Units

 

(a)                                  Performance Stock. The Committee may grant
Performance Stock to Eligible Persons. An Award of Performance Stock shall
consist of a Target Number of Shares granted to an Eligible Person subject to
achievement of Performance Goals over the applicable Performance Period, and
shall be subject to the terms, conditions and restrictions set forth in the
Plan and established by the Committee in connection with the Award and
specified in the applicable Award Document.

 

(b)                                 Performance Units. The Committee, in its
discretion, may grant Performance Units to Eligible Persons. A Performance
Unit shall entitle a Participant to receive, subject to the terms, conditions
and restrictions set forth in the Plan and established by the Committee in
connection with the Award and specified in the applicable Award Document, a
number of Shares or cash based on the Target Number or Target Payment, but
which may vary above or below the Target Number or Target Payment, and the
level of achievement of the Performance Goals under the Award over the
applicable Performance Period. At the sole discretion of the Committee,
Performance Units shall be settled through the delivery of Shares or cash, or a
combination of Shares and cash, with a value equal to the Fair Market Value of
the underlying Shares as of the last day of the applicable Performance Period.

 

11.                               Terms and Conditions of Annual Awards

 

The Committee, in its discretion, may grant Annual Awards to
Eligible Persons with respect to a Plan Year. An Annual Award shall entitle a
Participant to receive, subject to the terms, conditions and restrictions set
forth in the Plan and established by the Committee in connection with the Award
and specified in the applicable Award Document, payment of an amount based on
the Target Payment, but which may vary above or below the Target Payment,

 

14

 

and the level of achievement of the Performance Goals under the Award
over the applicable Plan Year. At the sole discretion of the Committee, Annual
Awards shall be settled through the delivery of cash or Shares, or a
combination of cash and Shares, with the value of any Shares deemed to be equal
to their Fair Market Value as of the last day of the applicable Plan Year.

 

12.                               Other Awards

 

The
Committee shall have the authority to specify the terms and provisions of other
forms of equity-based or equity-related Awards not described above that the
Committee determines to be consistent with the purpose of the Plan and the
interests of the Company, which Awards may provide for cash payments based
in whole or in part on the value or future value of Shares, for the
acquisition or future acquisition of Shares, or any combination thereof.

 

13.                               Certain Restrictions

 

(a)                                  Transfers. No Award shall be transferable
other than pursuant to a beneficiary designation under Section 13(c), by
last will and testament or by the laws of descent and distribution or, except
in the case of an Incentive Stock Option, pursuant to a domestic relations
order, as the case may be; provided, however, that the Committee may, subject
to applicable laws, rules and regulations and such terms and conditions as
it shall specify, permit the transfer of an Award, other than an Incentive
Stock Option, for no consideration to a Permitted Transferee. Any Award
transferred to a Permitted Transferee shall be further transferable only by
last will and testament or the laws of descent and distribution or, for no consideration,
to another Permitted Transferee of the Participant.

 

(b)                                 Award Exercisable Only by
Participant. During
the lifetime of a Participant, an Award shall be exercisable only by the
Participant or by a Permitted Transferee to whom such Award has been
transferred in accordance with Section 13(a). The grant of an Award shall
impose no obligation on a Participant to exercise or settle the Award.

 

(c)                                  Beneficiary Designation. The beneficiary or
beneficiaries of the Participant to whom any benefit under the Plan is to be
paid in case of his death before he receives any or all of such benefit shall
be determined under the Retiremant Plan. A Participant may, from time to time,
name any beneficiary or beneficiaries to receive any benefit in case of his
death before he receives any or all of such benefit. Each such designation
shall revoke all prior designations by the same Participant, including the
beneficiary designated under the Retiremant Plan, and will be effective only
when filed by the Participant in writing (in such form or manner as may be
prescribed by the Committee) with the Company during the Participant’s lifetime.
In the absence of a valid designation under the Retiremant Plan or otherwise,
if no validly designated beneficiary survives the Participant or if each
surviving validly designated beneficiary is legally impaired or prohibited from
receiving the benefits under an Award, the Participant’s beneficiary shall be
the Participant’s estate.

 

14.                               Recapitalization or Reorganization

 

(a)                                  Authority of the Company and
Stockholders. The
existence of the Plan, the Award Documents and the Awards granted hereunder
shall not affect or restrict in any way the right or power of the Company or
the stockholders of the Company to make or authorize any

 

15

 

adjustment, recapitalization, reorganization
or other change in the Company’s capital structure or business, any merger or
consolidation of the Company, any issue of stock or of options, warrants or
rights to purchase stock or of bonds, debentures, preferred or prior preference
stocks whose rights are superior to or affect the Shares or the rights thereof
or which are convertible into or exchangeable for Shares, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

 

(b)                                 Change in Capitalization. Notwithstanding any provision
of the Plan or any Award Document, the number and kind of Shares authorized for
issuance under Section 5, including the maximum number of Shares available
under the special limits provided for in Section 5(c), may be
equitably adjusted in the sole discretion of the Committee in the event of a stock
split, reverse stock spit, stock dividend, recapitalization, reorganization,
partial or complete liquidation, reclassification, merger, consolidation,
separation, extraordinary cash dividend, split-up, spin-off, combination,
exchange of Shares, warrants or rights offering to purchase Shares at a price
substantially below Fair Market Value, or any other corporate event or
distribution of stock or property of the Company affecting the Shares in order
to preserve, but not increase, the benefits or potential benefits intended to
be made available under the Plan. In addition, upon the occurrence of any of
the foregoing events, the number and kind of Shares subject to any outstanding
Award and the exercise price per Share (or the grant price per Share, as the case
may be), if any, under any outstanding Award may be equitably
adjusted (including by payment of cash to a Participant) in the sole discretion
of the Committee in order to preserve the benefits or potential benefits
intended to be made available to Participants. Such adjustments shall be made
by the Committee. Unless otherwise determined by the Committee, such adjusted
Awards shall be subject to the same restrictions and vesting or settlement schedule to
which the underlying Award is subject.

 

15.                               Term of the
Plan

 

Unless
earlier terminated pursuant to Section 17, the Plan shall terminate on the
tenth anniversary of the Effective Date, except with respect to Awards then
outstanding. No Awards may be granted under the Plan after the tenth
anniversary of the Effective Date.

 

16.                               Effective
Date

 

The
Plan shall become effective on the Effective Date, subject to approval by the
stockholders of the Company prior thereto.

 

17.                               Amendment and Termination

 

Subject
to applicable laws, rules and regulations, the Board may at any time
terminate or, from time to time, amend, modify or suspend the Plan; provided, however, that no
termination, amendment, modification or suspension (i) will be effective
without the approval of the stockholders of the Company if such approval is
required under applicable laws, rules and regulations, including the rules of
the Exchange and (ii) shall materially and adversely alter or impair the
rights of a Participant in any Award previously made under the Plan without the
consent of the holder thereof. Notwithstanding the foregoing, the Board shall
have broad

 

16

 

authority to amend the Plan or any Award under the Plan without the
consent of a Participant to the extent it deems necessary or desirable (a) to
comply with, take into account changes in, or interpretations of, applicable
tax laws, securities laws, employment laws, accounting rules and other
applicable laws, rules and regulations, (b) to take into account
unusual or nonrecurring events or market conditions (including, without
limitation, the events described in Section 14), or (c) to take into
account significant acquisitions or dispositions of assets or other property by
the Company.

 

18.                               Miscellaneous

 

(a)                                  Tax Withholding. The Company or a Subsidiary,
as appropriate, may require any individual entitled to receive a payment
of an Award to remit to the Company, prior to payment, an amount sufficient to
satisfy any applicable tax withholding requirements. In the case of an Award
payable in Shares, the Company or a Subsidiary, as appropriate, may permit
or require a Participant to satisfy, in whole or in part, such obligation to
remit taxes by directing the Company to withhold shares that would otherwise be
received by such individual or to repurchase shares that were issued to the
Participant to satisfy the minimum statutory withholding rates for any
applicable tax withholding purposes, in accordance with all applicable laws and
pursuant to such rules as the Committee may establish from time to
time. The Company or a Subsidiary, as appropriate, shall also have the right to
deduct from all cash payments made to a Participant (whether or not such
payment is made in connection with an Award) any applicable taxes required to
be withheld with respect to such payments.

 

(b)                                 No Right to Awards or Employment. No person shall have any claim
or right to receive Awards under the Plan. Neither the Plan, the grant of
Awards under the Plan nor any action taken or omitted to be taken under the
Plan shall be deemed to create or confer on any Eligible Person any right to be
retained in the employ of the Company or any Subsidiary or other Affiliate
thereof, or to interfere with or to limit in any way the right of the Company
or any Subsidiary or other Affiliate thereof to terminate the employment of
such Eligible Person at any time. No Award shall constitute salary, recurrent
compensation or contractual compensation for the year of grant, any later year
or any other period of time. Payments received by a Participant under any Award
made pursuant to the Plan shall not be included in, nor have any effect on, the
determination of employment-related rights or benefits under any other employee
benefit plan or similar arrangement provided by the Company and the Subsidiaries,
unless otherwise specifically provided for under the terms of such plan or
arrangement or by the Committee.

 

(c)                                  Securities Law Restrictions. An Award may not be
exercised or settled, and no Shares may be issued in connection with an
Award, unless the issuance of such shares (i) has been registered under
the Securities Act of 1933, as amended, (ii) has qualified under
applicable state “blue sky” laws (or the Company has determined that an
exemption from registration and from qualification under such state “blue sky”
laws is available) and (iii) complies with all applicable foreign
securities laws. The Committee may require each Participant purchasing or
acquiring Shares pursuant to an Award under the Plan to represent to and agree
with the Company in writing that such Eligible Person is acquiring the Shares
for investment purposes and not with a view to the distribution thereof. All
certificates for Shares delivered under the Plan shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the
Securities and

 

17

 

Exchange Commission and the Exchange, and any
applicable securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions.

 

(d)                                 Section 162(m) of the Code. The Plan is intended to comply
in all respects with Section 162(m) of the Code; provided, however,
that in the event the Committee determines that compliance with Section 162(m)
of the Code is not desired with respect to a particular Award, compliance with Section 162(m)
of the Code will not be required. In addition, if any provision of this Plan
would cause Awards that are intended to constitute “qualified performance-based
compensation” under Section 162(m) of the Code, to fail to so qualify,
that provision shall be severed from, and shall be deemed not to be a part of,
the Plan, but the other provisions hereof shall remain in full force and
effect.

 

(e)                                  Section 409A of the Code. Notwithstanding any contrary
provision in the Plan or an Award Document, if any provision of the Plan or an
Award Document contravenes, or would cause an Award to be subject to additional
taxes, accelerated taxation, interest and/or penalties under, Section 409A
of the Code, such provision of the Plan or Award Document may be modified
by the Committee without consent of the Participant in any manner the Committee
deems reasonable or necessary. In making such modifications the Committee shall
attempt, but shall not be obligated, to maintain, to the maximum extent
practicable, the original intent of the applicable provision without
contravening the requirements of Section 409A of the Code. Moreover, any
discretionary authority that the Committee may have pursuant to the Plan
shall not be applicable to an Award to the extent such Award is subject to, and
such discretionary authority would contravene, Section 409A of the Code.

 

(f)                                    Awards to Individuals Subject to
Laws of a Jurisdiction Outside of the United States. To the extent that Awards
under the Plan are awarded to Eligible Persons who are domiciled or resident
outside of the United States or to persons who are domiciled or resident in the
United States but who are subject to the tax laws of a jurisdiction outside of
the United States, the Committee may adjust the terms of the Awards
granted hereunder to such person (i) to comply with the laws, rules and
regulations of such jurisdiction and (ii) to permit the grant of the Award
not to be a taxable event to the Participant. The authority granted under the
previous sentence shall include the discretion for the Committee to adopt, on
behalf of the Company, one or more sub-plans applicable to separate classes of
Eligible Persons who are subject to the laws of jurisdictions outside of the
United States.

 

(g)                                 Satisfaction of Obligations. Subject to applicable law, the
Company may apply any cash, Shares, securities or other consideration
received upon exercise or settlement of an Award to any obligations a
Participant owes to the Company and the Subsidiaries in connection with the
Plan or otherwise, including, without limitation, any tax obligations or
obligations under a currency facility established in connection with the Plan.

 

(h)                                 No Limitation on Corporate
Actions. Nothing
contained in the Plan shall be construed to prevent the Company or any
Subsidiary from taking any corporate action, whether or not such action would
have an adverse effect on any Awards made under the Plan. No Participant,
beneficiary or other person shall have any claim against the Company or any
Subsidiary as a result of any such action.

 

18

 

(i)                                     Unfunded Plan. The Plan is intended to
constitute an unfunded plan for incentive compensation. Prior to the issuance
of Shares, cash or other form of payment in connection with an Award,
nothing contained herein shall give any Participant any rights that are greater
than those of a general unsecured creditor of the Company. The Committee may,
but is not obligated, to authorize the creation of trusts or other arrangements
to meet the obligations created under the Plan to deliver Shares with respect
to awards hereunder.

 

(j)                                     Successors. All obligations of the Company
under the Plan with respect to Awards granted hereunder shall be binding on any
successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all
or substantially all of the business and/or assets of the Company.

 

(k)                                  Application of Funds. The proceeds received by the
Company from the sale of Shares pursuant to Awards will be used for general
corporate purposes.

 

(l)                                     Award Document. In the event of any conflict
or inconsistency between the Plan and any Award Document, the Plan shall govern
and the Award Document shall be interpreted to minimize or eliminate any such
conflict or inconsistency.

 

(m)                               Headings. The headings of Sections
herein are included solely for convenience of reference and shall not affect
the meaning of any of the provisions of the Plan.

 

(n)                                 Severability. If any provision of this Plan
is held unenforceable, the remainder of the Plan shall continue in full force
and effect without regard to such unenforceable provision and shall be applied
as though the unenforceable provision were not contained in the Plan.

 

(o)                                 Expenses. The costs and expenses of
administering the Plan shall be borne by the Company.

 

(p)                                 Arbitration. Any dispute, controversy or
claim arising out of or relating to the Plan that cannot be resolved by the
Participant on the one hand, and the Company on the other, shall be submitted
to arbitration in the State of New Jersey under the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association; provided, however,
that any such submission by the Participant must be made within one year of the
date of the events giving rise to such dispute, controversy or claim. The
determination of the arbitrator shall be conclusive and binding on the Company
and the Participant, and judgment may be entered on the arbitrator’s award
in any court having jurisdiction. The expenses of such arbitration shall be
borne by the Company; provided, however, that each party shall bear its
own legal expenses unless the Participant is the prevailing party, in which
case the Company shall promptly pay or reimburse the Participant for the
reasonable legal fees and expenses incurred by the Participant in connection
with such contest or dispute (excluding any fees payable pursuant to a
contingency fee arrangement).

 

(q)                                 Governing Law. Except as to matters of
federal law, the Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of New York.

 

19

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