Document:

Exhibit 4.3

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

STOCK PURCHASE WARRANT

To Purchase Common Stock of

Vonage Holdings Corp.

	
  Date of Initial Issuance:

  	
   

  	
  June 20, 2002

  
	
  Number of Shares:

  	
   

  	
  1,440,000

  
	
  Initial Warrant Price:

  	
   

  	
  $0.25

  
	
  Expiration Date:

  	
   

  	
  June 20, 2012

  

 

THIS
CERTIFIES THAT for value received, JEFFREY A. CITRON,
or registered assigns (hereinafter called “Holder”), is entitled to purchase
from VONAGE HOLDINGS CORP, a Delaware corporation (“the Company”),
at any time during the Term of this Warrant, One Million Four Hundred Forty
Thousand (1,440,000) shares of common stock of the Company (“Common Stock”), at
the Warrant Price, payable as provided herein. 
The exercise of this Warrant shall be subject to the provisions,
limitations and restrictions herein contained.  This Warrant may be exercised in whole or in
part.

1.             Definitions.

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

“Common Stock”
shall mean and include the Company’s authorized common stock, as constituted at the date hereof.

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

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

“Term of this Warrant” shall mean the period beginning on the date of initial
issuance hereof and ending on the tenth (10th) anniversary of such date of initial issuance.

“Warrant Price”
shall mean Twenty-Five Cents ($0.25) per share, subject to adjustment in
accordance with Section 5 hereof.

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

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

2.             Exercise of Warrant.

2.1          Procedure for Exercise of Warrant.  To exercise this Warrant in whole or in part
(but not as to any fractional share of Common Stock), Holder shall deliver to
the Company at its office referred to in Section 14 hereof at any time and from
time to time during the Term of this Warrant: (i) the Notice of Exercise in the
form of Exhibit A attached hereto, (ii) cash, certified or official bank
check payable to the order of the Company, wire

 

transfer of funds to the
Company’s account, or cancellation of any indebtedness of the Company to Holder
(or any combination of any of the foregoing) in the amount of the Warrant Price
for each share being purchased, and (iii) this Warrant. Notwithstanding any
provisions herein to the contrary, if the Current Market Price (as defined below)
is greater than the Warrant Price (at the date of calculation, as set forth
below), in lieu of exercising this Warrant as hereinabove permitted, Holder may
elect to receive shares of Common Stock equal to the value (as determined
below) of this Warrant (or the portion thereof being canceled) by surrender of
this Warrant at the office of the Company referred to in Section 14 hereof,
together with the Notice of Exercise, in which event the Company shall issue to
Holder that number of whole shares of Common Stock computed using the following
formula:

CS = WCS x
(CMP-WP)
                                CMP

Where

	
   

  	
  CS

  	
  equals the number of
  shares of Common Stock to be issued to Holder

  
	
   

  	
  WCS

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

  
	
   

  	
  CMP

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

  
	
   

  	
  WP

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

  

 

In
the event of any exercise of the rights represented by this Warrant, a certificate or
certificates for the shares of Common Stock so purchased, registered in the
name of Holder or such other name or names
as may be designated by Holder, shall be delivered to Holder hereof
within a reasonable time, not exceeding fifteen (15) days, after the rights
represented by this Warrant shall have been so exercised; and, unless this
Warrant has expired, a new Warrant representing the number of shares (except a
remaining fractional share), if any, with respect to which this Warrant shall
not then have been exercised shall also be issued to Holder hereof within such
time.  The person in whose name any
certificate for shares of
Common Stock is issued upon
exercise of this Warrant shall for all purposes be deemed to have become the
holder of record of such shares on the date on which Holder shall have complied
with the conditions for exercise of this Warrant set forth above, irrespective
of the date of delivery of such certificate, except that, if the date of such
compliance is a date when the stock transfer books of the Company are closed,
such person shall be deemed to have become the holder of such shares at the
close of business on the next succeeding date on which the stock transfer books
are open.

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

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

Any certificate
issued at any time in exchange or substitution for any certificate bearing such
legend (except a new certificate issued upon completion of a public
distribution under a registration statement of the securities

 

2

 

represented
thereby) shall also bear such legend unless, in the opinion of counsel for
Holder thereof (which counsel shall be reasonably satisfactory to the Company)
the securities represented thereby are not, at such time, required by law to bear such legend.

3.             Covenants as to Common Stock.  The
Company covenants and agrees that:

(a)           All shares of Common Stock that may
be issued upon the exercise of the rights represented by this Warrant shall,
upon issuance, be validly issued, fully paid and nonassessable, and free from
all taxes, liens and charges with respect to the issue thereof.

(b)           It shall pay when due and payable any
and all federal and state taxes which may be payable in respect of the issue of
this Warrant or any Common Stock or certificates therefor issuable upon the
exercise of this Warrant.  The Company
further covenants and agrees that the Company shall at all times have
authorized and reserved, free from preemptive rights, a sufficient number of
shares of Common Stock to provide for the exercise of the rights represented by
this Warrant.

(c)           if any shares of capital stock to be
reserved for the purpose of the issuance of shares upon the exercise of this
Warrant require registration with or approval of any governmental authority
under any federal or state law before such shares may be validly issued or
delivered upon exercise, then the Company shall in good faith and as
expeditiously as possible endeavor to secure such registration or approval, as
the case may be.  If and so long as the
Common Stock issuable upon the exercise of this Warrant is listed on any
national securities exchange, the Company shall, if permitted by the rules of
such exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of such Common Stock issuable upon exercise of this
Warrant.

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

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

6.             Adjustment of Warrant Price.  As used in this Section 6, “Net Consideration Per
Share” means (1) the amount equal to the total amount of consideration, if
any, received by the Company upon (x) the issuance or sale of shares of Common
Stock or (y) the issuance or sale of any rights, options or warrants
exercisable or exchangeable for Common Stock, or (z) any security convertible
into or exchangeable for shares of Common Stock plus (2) the minimum amount set
forth in the terms of any of the securities referred to in clauses (x) and (y)
as payable to the Company upon the exercise or conversion thereof, divided by
(3) the aggregate number of shares of Common Stock that would be issued if all
such rights, options or warrants or convertible or exchangeable securities were
exercised, or converted or exchanged to the fullest extent permitted by their
terms.  The Warrant Price shall be
subject to adjustment from time to time as follows:

(a)           The Warrant Price, and the number of
shares of Common Stock issuable upon exercise of the Warrant, shall be
proportionately adjusted each time the Company takes any of the following
actions after the date the Warrant was first issued:

(i)                                     Declares a dividend on the outstanding Common
Stock payable in shares of its Common Stock, or securities convertible into or
exchangeable for Common Stock;

 

3

(ii)                                  Subdivides the outstanding Common Stock;
or

(iii)                               Combines the outstanding Common Stock
into a smaller number of shares.

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

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

	
  ACP

  	
  =

  	
  PCP

  	
  X

  	
  OSC 

  	
  +

  	
  AOP

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PCP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  OSS

  

 

where ACP is the adjusted
Warrant Price,

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

OSC is the number
of shares of Common Stock outstanding on such record or issue date,

AOP is the sum of
the Net Consideration Per Share for all shares of Common Stock, rights, options
or warrants or convertible or exchangeable securities issued in such issuance,
as applicable, and

OSS is the number
of shares of Common Stock outstanding immediately subsequent to such issuance.

Any adjustment under this
Section 8(b) shall become effective at the close of business on the relevant record
or issue date. For the purpose of all such adjustments hereunder, the maximum
number of shares of Common Stock which the holders of any such rights, options,
warrants, or convertible or exchangeable securities shall be entitled to
subscribe for or purchase or convert or exchange such securities into shall be
deemed to be issued and outstanding.  To
the extent the shares of Common Stock are not delivered, or securities convertible
into or exchangeable for shares of Common Stock are not exercised or exchanged,
before expiration of the time allowed for delivery, exercise or exchange, the Warrant
Price shall be readjusted to the Warrant Price which would then be in effect
had the adjustment required by this Section been made upon the basis of
delivery of only the number of the number of shares of Common Stock (or
securities convertible into or exchangeable for shares of Common Stock)
actually issued.  On any change of the
number of shares of Common Stock deliverable upon the exercise of any such
rights, options, or warrants or exercise or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by
the Company upon such exercise, exercise, or exchange, including, but not
limited to, a change resulting from
the antidilution provisions thereof, the Warrant Price, as then in
effect, shall forthwith be readjusted to such Warrant Price as would have been
obtained had an adjustment been made upon the issuance of such rights, options,
or warrants not exercised prior to such change, or securities not exercised or
exchanged prior to such change, on the basis of such change; provided, that no
such change shall at any time cause the Warrant Price hereunder to be greater
than the initial Warrant Price. Any such readjustment shall apply only to shares
of Common Stock issued upon exercises of this Warrant taking place after such
expiration.  In case any

 

4

purchase price may be
paid in a consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
Board of Directors of the Company, whose determination shall be conclusive absent
manifest error.  Shares of Common Stock
owned by or held for the account of the Company or any majority-owned
subsidiary shall not be deemed outstanding for the purpose of any such
computation.

(c)           In case the Company shall distribute
to all holders of Common Stock (other than such distribution made to the
stockholders of the Company in connection with a consolidation or merger to
which Section 6(e) is applicable or a reclassification or recapitalization to
which Section 6(j) is applicable) evidences of its indebtedness or assets or
any shares of its capital stock (other than cash dividends or distributions and
dividends payable in shares of Common Stock or securities convertible into
Common Stock), or rights, options, or warrants to subscribe for or purchase
Common Stock or securities convertible into or exchangeable for shares of
Common Stock (excluding those with respect to the issuance of which an
adjustment of the Warrant Price is provided pursuant to Section 6(a) or Section
6(b) hereof), then, in each case, the holders of the Warrant shall be entitled
to a proportionate share of any such distribution as though they were actual
holders of the numbers of shares of Common Stock for which their respective
Warrants are exercisable as of the record or issue date for the distribution in
question. Any such distribution to the holders of the Warrants shall be made
whenever any of the corresponding distribution is made, and shall become
effective on the record or issue date for the determination of stockholders
entitled to receive such corresponding distribution.

(d)           In case the Company shall issue, sell
or exchange shares of Common Stock or rights, options, or warrants to subscribe
for or purchase Common Stock, or securities convertible into or exchangeable
for Common Stock (excluding shares, rights, options, warrants, or convertible
or exchangeable securities issued or issuable in any of the transactions with
respect to which an adjustment of the Warrant Price is provided pursuant to
Sections 8(a), 8(b), and 8(c) above) at a Net Consideration Per Share, as
applicable, lower than the Warrant Price in effect immediately prior to such
issuance, then the Warrant Price shall be reduced on the date of such issuance
to a price (calculated to the nearest cent) determined according to the
following formula:

	
  ACP

  	
  =

  	
  PCP

  	
  X

  	
  OSC 

  	
  +

  	
  $$$

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PCP

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  OSS

  

 

where ACP is the adjusted
Warrant Price,

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

OSC is the number
of shares of Common Stock outstanding immediately prior to such issuance,

OSS is the number
of shares of Common Stock outstanding immediately subsequent to such issuance,
and

$$$ is the sum of
the Net Consideration Per Share for all shares of Common Stock, rights, options
or warrants or convertible or exchangeable securities issued in such issuance,
as applicable.

Any adjustment under this
Section 6(d) shall become effective at the close of business on the relevant
record or issue date.  For the purpose of
all such adjustments hereunder, the maximum number of shares of Common Stock
which the holders of any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to subscribe for or purchase or
convert or exchange such securities into shall be deemed to be issued and
outstanding.  No further adjustment of
the Warrant Price shall be made as a result of the actual issuance of shares of
Common Stock on exercise of such rights, options, or warrants or on exercise or
exchange of such convertible or exchangeable securities.  On the expiration or the termination of such
rights, options or warrants, or

 

5

the termination of such right to convert or exchange,
the Warrant Price shall be readjusted to such Warrant Price as would have been
obtained had the adjustments made upon the issuance of such rights, options,
warrants, or convertible or exchangeable securities been made upon the basis of
the delivery of only the number of shares of Common Stock actually delivered
upon the exercise of such rights, options, or warrants or upon the exercise or exchange
of any such securities.  On any change of
the number of shares of Common Stock deliverable upon the exercise of any such
rights, options, or warrants or exercise or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by
the Company upon such exercise, exercise, or exchange, including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Warrant Price, as then in effect, shall forthwith be readjusted to such Warrant
Price as would have been obtained had an adjustment been made upon the issuance
of such rights, options, or warrants not exercised prior to such change, or securities
not exercised or exchanged prior to such change, on the basis of such change;
provided that no such change shall at any time cause the Warrant Price
hereunder to be greater than the initial Warrant Price.  Any readjustment under the preceding two sentences
shall apply only to shares of Common Stock issued upon exercises of this
Warrant taking place after such expiration or change.  In case the Company shall issue shares of
Common Stock or any such rights, options, warrants, or convertible or
exchangeable securities for a consideration consisting, in whole or in part, of
property other than cash or its equivalent, then the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be conclusive absent manifest error.  Shares of Common Stock owned by or held for
the account of the Company or any majority-owned subsidiary shall not be deemed
outstanding for the purpose of any such computation.

(e)           In case at any time the Company shall
be a party to any transaction in which the previously outstanding Common Stock
shall be exercised or changed into or exchanged for securities of another
corporation or interests in a non-corporate entity or other property (including
cash) or any combination of the foregoing (each such transaction being herein
called a “Transaction”), then, if a holder of a Warrant shall so elect,
as a condition of the consummation of the Transaction, lawful and adequate
provision shall be made so that the Warrant held by such holder shall be
exercised into an equal number of securities of such other corporation or
entity that have economic rights, voting powers (including rights with respect
to election of directors), preferences, and other special rights, privileges,
powers or immunities substantially identical to the Warrant and that provide,
upon the exercise thereof at any time on or after the consummation of the
Transaction, for the receipt of securities, cash or other property to which
such holder would have been entitled upon consummation of the Transaction if
such holder had exercised such Warrant immediately prior thereto (subject to
adjustments from and after the consummation date as nearly equivalent as
possible to the adjustments provided for in this Section 6).  The Company will not effect any Transaction
unless prior to the consummation thereof each corporation or entity which may
be required to deliver any securities or other property upon the exercise of
the Warrant as provided herein shall assume the obligation to deliver to such
holder such securities or other property as, in accordance with the foregoing
provisions, such holder may be entitled to receive.  The foregoing provisions of this Section 6(e)
shall similarly apply to successive mergers, consolidations, sales of assets,
liquidations and recapitalizations.

(f)            No adjustment in the Warrant Price
shall be required if such adjustment is less than $.0025; provided, however,
that any adjustments which by reason of this Section 6(f) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment.

(g)           Upon each adjustment of the Warrant
Price as a result of the calculations made in Section 6(b), 6(c), or 6(d)
hereof, any certificate evidencing the Warrant shall thereafter be exercisable,
at the adjusted Warrant Price, for a number of shares calculated to the next
thousandth as follows:  First multiply
the “old” number of shares of Common Stock then obtainable through exercise in
full of the Warrant by the “old” Warrant Price.  Second, divide the result by the “new” Warrant
Price.  “Old” refers to the number of
shares and Warrant Price in effect immediately prior to the adjustment, and “new”
refers to the Warrant Price in effect immediately following the adjustment.

(h)           Whenever there shall be an adjustment
as provided in this Section 6, the Company shall promptly cause written notice
thereof to be sent by registered mail, postage prepaid, to each holder of
Warrants, at its address as it shall appear in the Company’s stock records,
which notice shall be accompanied by an officer’s

 

6

certificate setting forth
the Warrant Price after such adjustment and setting forth a brief statement of
the facts requiring such adjustment and the computation thereof, which officer’s
certificate shall be conclusive evidence of the correctness of any such
adjustment absent manifest error.

(i)            The Company shall not be required to
issue fractions of shares of Common Stock or other capital stock of the Company
upon exercise of the Warrant.  If any
fraction of a share would be issuable on exercise, the Company shall purchase
such fraction for an amount in cash equal to the same fraction of the fair
market value of a share of Common Stock on the date of exercise.

(j)            If the Common Stock issuable upon
the exercise of the Warrant shall be changed into the same or different number
of shares of any class or classes of stock, whether by reclassification or
otherwise (other than a subdivision or combination of shares or stock dividend
provided for above), then and in each such event the holder of the Warrant
shall have the right thereafter, upon exercise in full thereof, to obtain the
kind and amount of shares of stock and other securities and property receivable
upon such reorganization, reclassification or other change, by holders of the
number of shares of Common Stock for which the Warrant could have been
exercised in full immediately prior to such reorganization, reclassification or
change, appropriately prorated to reflect any partial exercise of the Warrant,
all subject to further adjustment as provided herein.

(k)           All calculations under this Section 6
shall be made to the nearest cent or to the nearest one thousandth (1/1000) of
a share, as the case may be.

(l)            No adjustment in the Warrant Price
shall be required if such adjustment would result from the issuance of any of
the following:  (A) shares of Common
Stock issued upon exercise of the Warrant, (B) shares of Common Stock or
options, warrants or other rights to purchase Common Stock issued or granted to
employees, officers or directors of, or consultants or advisors to the Company
or any subsidiary pursuant to stock purchase or stock option plans or other
arrangements approved by the Board of Directors; (C) shares of Common Stock
issued pursuant to the exercise of options, warrants or other rights to
purchase Common Stock or exercise of convertible securities outstanding on the
date hereof or granted in accordance with clause (B) above; (D) shares of Common
Stock and/or rights, options or warrants to purchase Common Stock, and the
Common Stock issued pursuant to such options, warrants or other rights issued
for consideration other than cash pursuant to a merger, consolidation, acquisition
or similar business combination approved by the holders of 66-2/3% of the
outstanding shares of the Company’s Series A Convertible Preferred Stock, par
value $.00l per share; (E) shares of Common Stock issued pursuant to any bona
fide equipment leasing arrangement, or debt financing from a bank or similar
financial institution approved by the Board of Directors of the Company
(including by all of the members thereof who were designated by holders of the
aforementioned Preferred Stock); and (F) securities issued in a transaction
with a vendor, customer or strategic partner, up to a maximum of either (i)
0.5% of outstanding shares of Common Stock on a fully diluted basis in a single
transaction or (ii) 2.0% of outstanding shares of Common Stock on a fully
diluted basis in the aggregate.

(m)          In any case in which the provisions of
this Section 6 shall require that an adjustment shall become effective
immediately after a record date for an event, the Company may defer until the
occurrence of such event issuing to Holder of all or any part of this Warrant
which is exercised after such record date and before the occurrence of such
event the additional shares of capital stock issuable upon such exercise by
reason of the adjustment required by such event over and above the shares of capital
stock issuable upon such exercise before giving effect to such adjustment
exercise; provided, however, that the Company shall deliver to such Holder a
due bill or other appropriate instrument evidencing such Holder’s right to
receive such additional shares upon the occurrence of the event requiring such
adjustment.

7.             Ownership.

7.1          Ownership of This Warrant.  The
Company may deem and treat the person in whose name this Warrant is registered
as the holder and owner hereof (notwithstanding any notations of ownership or
writing

 

7

hereon made by anyone
other than the Company) for all purposes and shall not be affected by any
notice to the contrary until presentation of this Warrant for registration of
transfer as provided in this Section 7.

7.2          Transfer and Replacement.  This Warrant and all rights hereunder are
transferable in whole or in part upon the books of the Company by Holder hereof
in person or by duly authorized attorney, and a new Warrant or Warrants, of the
same tenor as this Warrant but registered in the name of the transferee or
transferees (and in the name of Holder, if a partial transfer is effected)
shall be made and delivered by the Company upon surrender of this Warrant duly
endorsed, at the office of the Company referred to in Section 14 hereof,
together with a properly executed Assignment (in the form of Exhibit B
or Exhibit C hereto, as the case may be).  Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft or destruction, and, in such
case, of indemnity or security reasonably satisfactory to it, and upon
surrender of this Warrant if mutilated, the Company shall make and deliver a
new Warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly cancelled by
the Company upon the surrender hereof in connection with any transfer or
replacement.  Except as otherwise
provided above, in the case of the loss, theft or destruction of a Warrant, the
Company shall pay all expenses, taxes and other charges payable in connection
with any transfer or replacement of this Warrant, other than stock transfer
taxes (if any) payable in connection with a transfer of this Warrant, which
shall be payable by Holder.  Holder shall
not transfer this Warrant and the rights hereunder except in compliance with federal
and state securities laws.

8.             Mergers, Consolidation, Sales.  In the case of any proposed
consolidation or merger of the Company with another entity, or the proposed
sale of all or substantially all of its assets to another person or entity, or
any proposed reorganization or reclassification of the capital stock of the
Company, then, as a condition of such consolidation, merger, sale,
reorganization or reclassification, the Company shall give 30 days’ prior
written notice thereof to Holder hereof
and lawful and adequate provision shall be made whereby Holder shall
thereafter have the right to receive upon the basis and upon the terms and
conditions specified herein, in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable hereunder, such shares of stock,
securities or assets as may (by virtue of such consolidation, merger, sale,
reorganization or reclassification) be issued or payable with respect to or in
exchange for the number of shares of such Common Stock purchasable hereunder
immediately before such consolidation, merger, sale, reorganization or
reclassification. In any such case appropriate provision shall be made with
respect to the rights and interests of Holder to the end that the provisions
hereof shall thereafter be applicable as nearly as may be practicable, in
relation to any shares of stock, securities or assets thereafter deliverable
upon the exercise of this Warrant.

9.             Notice of Dissolution or Liquidation.  In case of any
distribution of the assets of the Company in dissolution or liquidation (except
under circumstances when the foregoing Section 8 shall be applicable), the
Company shall give notice thereof to Holder hereof and shall make no
distribution to shareholders until the expiration of thirty (30) days from the
date of mailing of the aforesaid notice and, in any case, Holder hereof may
exercise this Warrant within thirty (30) days from the date of the giving of
such notice, and all rights herein granted not so exercised within such
thirty-day period shall thereafter become null and void.

10.          Notice of Extraordinary Dividends.  If the Board of Directors
of the Company shall declare any dividend or other distribution on its Common
Stock except out of earned surplus or by way of a stock dividend payable in
shares of its Common Stock, the Company shall mail notice thereof to Holder
hereof not less than thirty (30) days prior to the record date fixed for
determining shareholders entitled to participate in such dividend or other
distribution, and Holder hereof shall not participate in such dividend or other
distribution unless this Warrant is exercised prior to such record date.  The provisions of this Section 10 shall not
apply to distributions made in connection with transactions covered by Section
8.

11.          Fractional Shares.  Fractional shares shall not be issued upon the
exercise of this Warrant but in any case where Holder would, except for the
provisions of this Section 11, be entitled under the terms hereof to receive a
fractional share upon the complete exercise of this Warrant, the Company shall,
upon the exercise of this Warrant for the largest number of whole shares then
called for, pay a sum in cash equal to the excess of the value of such fractional
share (determined in such reasonable manner as may be prescribed in good faith
by the Board of Directors of the Company) over the Warrant Price for such
fractional share.

 

8

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

12.1        Shall Not Amend Certificate.  The
Company shall not amend its certificate or articles, as the case may be, of
incorporation to eliminate as an authorized class of capital stock that class
denominated as “Common Stock” on the date hereof.

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

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

14.          No Rights as Stockholder; Limitation of Liability.  This Warrant shall not
entitle Holder to any of the rights of a shareholder of the Company except upon
exercise in accordance with the terms hereof.  No provision hereof, in the absence of
affirmative action by Holder to purchase shares of Common Stock, and no mere
enumeration herein of the rights or privileges of Holder, shall give rise to
any liability of Holder for the Warrant Price hereunder or as a shareholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.

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

16.          Amendments.  This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by both parties (or any respective predecessor in interest thereof).
 The headings in this Warrant are for
purposes of reference only and shall not affect the meaning or construction of
any of the provisions hereof.

IN WITNESS WHEREOF, the
Company has caused this Warrant to be signed by its duly authorized officer
this 20th day of June, 2002.

 

	
   

  	
  Vonage Holdings Corp.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 

  
	
   

  	
  Title: 

  	
  Secretary

  

 

 

9

EXHIBIT A

FORM OF NOTICE OF EXERCISE

[To be signed
only upon exercise of the Warrant]

TO BE EXECUTED
BY THE REGISTERED HOLDER

TO EXERCISE THE ATTACHED WARRANT

The undersigned hereby
exercises the right to purchase                  
shares of Common Stock which the undersigned is entitled to purchase by the
terms of the attached Warrant according to the conditions thereof, and herewith

[check appropriate
box(es)]

o              makes payment of $                 
therefor in cash;

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

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

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

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

 

	
   

  	
   

  
	
   

  	
  [Type Name of Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
					

 

 

10

EXHIBIT B

FORM OF ASSIGNMENT

(ENTIRE)

[To be signed
only upon transfer of entire Warrant]

TO BE EXECUTED
BY THE REGISTERED HOLDER

TO TRANSFER THE ATTACHED WARRANT

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

 

	
   

  	
   

  
	
   

  	
  [Type Name of Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
					

 

NOTICE:

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

 

11

 

EXHIBIT C

FORM OF ASSIGNMENT

(PARTIAL)

[To be signed
only upon partial transfer of Warrant]

TO BE EXECUTED
BY THE REGISTERED HOLDER

TO TRANSFER THE ATTACHED WARRANT

FOR VALUE RECEIVED                        
hereby sells, assigns and transfers unto                          
(i) the rights of the undersigned to purchase                   
shares of Common Stock under and pursuant to the attached Warrant, and (ii) on
a non-exclusive basis, all other rights of the undersigned under and pursuant
to the attached Warrant, it being understood that the undersigned shall retain,
severally (and not jointly) with the transferee(s) named herein, all rights
assigned on such non-exclusive basis.  The undersigned does hereby irrevocably constitute and appoint                            Attorney to transfer said Warrant on
the books of Vonage Holdings Corp., with full power of substitution.

 

	
   

  	
   

  
	
   

  	
  [Type Name of Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
					

 

NOTICE:

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

 

12Exhibit 4.4

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

STOCK PURCHASE WARRANT

To Purchase Shares of

Series A-2 Convertible Preferred Stock, par value $.001 per share

of

Vonage Holdings Corp.

	
  Date of Initial Issuance:

  	
  October 1, 2003

  	
   

  
	
  Number of Shares:

  	
  900,000

  	
   

  
	
  Initial Warrant Price:

  	
  $4.00

  	
   

  
	
  Expiration Date:

  	
  September 30, 2008

  	
   

  

 

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

1.                                      Definitions.

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

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

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

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

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

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

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

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

2.                                      Exercise of Warrant.

2.1          Procedure
for Exercise of Warrant.  To exercise
this Warrant in whole or in part (but not as to any fractional share of Series
A-2 Stock), Holder shall deliver to the Company at its office referred to in
Section 14 hereof at any time and from time to time during the Term of this
Warrant: (i) the Notice of Exercise in the form of

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

PS = WPS x (CMP-WP)

CMP

Where

	
   

  	
  PS

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

  
	
   

  	
  WPS

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

  
	
   

  	
  CMP

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

  
	
   

  	
  WP

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

  

In the event of any exercise of the rights represented
by this Warrant, a certificate or certificates for the shares of Series A-2 Stock
so purchased, registered in the name of Holder or such other name or names as
may be designated by Holder, shall be delivered to Holder hereof within a
reasonable time, not exceeding fifteen (15) days, after the rights represented
by this Warrant shall have been so exercised; and, unless this Warrant has
expired, a new Warrant representing the number of shares (except a remaining
fractional share), if any, with respect to which this Warrant shall not then
have been exercised shall also be issued to Holder hereof within such time.  The person in whose name any certificate for
shares of Series A-2 Stock is issued upon exercise of this Warrant shall for
all purposes be deemed to have become the holder of record of such shares on
the date on which Holder shall have complied with the conditions for exercise
of this Warrant set forth above, irrespective of the date of delivery of such
certificate, except that, if the date of such compliance is a date when the
stock transfer books of the Company are closed, such person shall be deemed to
have become the holder of such shares at the close of business on the next
succeeding date on which the stock transfer books are open.

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

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

 

2

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

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

(a)                                 All shares of Series A-2 Stock that may
be issued upon the exercise of the rights represented by this Warrant shall,
upon issuance, be validly issued, fully paid and nonassessable, and free from
all taxes, liens and charges with respect to the issue thereof.

(b)                                 It shall pay when due and payable any and
all federal and state taxes which may be payable in respect of the issue of
this Warrant or any Series A-2 Stock or certificates therefor issuable upon the
exercise of this Warrant.  The Company
further covenants and agrees that the Company shall at all times have
authorized and reserved, free from preemptive rights, a sufficient number of
shares of Series A-2 Stock to provide for the exercise of the rights
represented by this Warrant.

(c)                                  If any shares of capital stock to be
reserved for the purpose of the issuance of shares upon the exercise of this
Warrant require registration with or approval of any governmental authority
under any federal or state law before such shares may be validly issued or
delivered upon exercise, then the Company shall in good faith and as
expeditiously as possible endeavor to secure such registration or approval, as
the case may be.  If and so long as the
Series A-2 Stock issuable upon the exercise of this Warrant is listed on any
national securities exchange, the Company shall, if permitted by the rules of
such exchange, list and keep listed on such exchange, upon official notice of
issuance, all shares of such Series A-2 Stock issuable upon exercise of this
Warrant.

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

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

6.                                      Adjustment of Warrant
Price.  As used in this Section 6, “Net Consideration
Per Share” means (1) the amount equal to the total amount of consideration,
if any, received by the Company upon (x) the issuance or sale of shares of
Series A-2 Stock or (y) the issuance or sale of any rights, options or warrants
exercisable or exchangeable for Series A-2 Stock, or (z) any security
convertible into or exchangeable for shares of Series A-2 Stock plus (2) the
minimum amount set forth in the terms of any of the securities referred to in
clauses (x) and (y) as payable to the Company upon the exercise or conversion
thereof, divided by (3) the aggregate number of shares of Series A-2 Stock that
would be issued if all such rights, options or warrants or convertible or
exchangeable securities were exercised, or converted or exchanged to the
fullest extent permitted by their terms.  The Warrant Price shall be subject to
adjustment from time to time as follows:

(a)                                 The Warrant Price, and the number of
shares of Series A-2 Stock issuable upon exercise of the Warrant, shall be
proportionately adjusted each time the Company takes any of the following
actions after the date the Warrant was first issued:

(i)                                     Declares a dividend on the outstanding
Series A-2 Stock payable in shares of its Series A-2 Stock, or securities
convertible into or exchangeable for Series A-2 Stock;

 

3

(ii)                                  Subdivides the outstanding Series A-2
Stock; or

(iii)                               Combines the outstanding Series A-2 Stock
into a smaller number of shares.

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

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

	
   

  	
   

  	
   

  	
  OSC

  	
   + 

  	
   

  	
  AOP

  
	
   

  	
  ACP

  	
   = 

  	
   PCP 

  	
   X 

  	
   

  	
  PCP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  OSS

  
									

 

where ACP is the adjusted Warrant Price,

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

                OSC
is the number of shares of Series A-2 Stock outstanding on such record or issue
date,

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

                OSS
is the number of shares of Series A-2 Stock outstanding immediately subsequent
to such issuance.

Any adjustment under this Section 8(b) shall become
effective at the close of business on the relevant record or issue date.  For the purpose of all such adjustments
hereunder, the maximum number of shares of Series A-2 Stock which
the holders of any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to subscribe for or purchase or
convert or exchange such securities into shall be deemed to be issued and
outstanding.  To the extent the shares of
Series A-2 Stock are not delivered, or securities convertible into or
exchangeable for shares of Series A-2 Stock are not exercised or exchanged,
before expiration of the time allowed for delivery, exercise or exchange, the
Warrant Price shall be readjusted to the Warrant Price which would then be in
effect had the adjustment required by this Section been made upon the basis of
delivery of only the number of shares of Series A-2 Stock (or securities
convertible into or exchangeable for shares of Series A-2 Stock) actually
issued.  On any change of the number of
shares of Series A-2 Stock deliverable upon the exercise of any such rights,
options, or warrants or exercise or exchange of such convertible or
exchangeable securities or any change in the consideration to be received by
the Company upon such exercise, exercise, or exchange, including, but not
limited to, a change resulting from the antidilution provisions thereof, the
Warrant Price, as then in effect, shall forthwith be readjusted to such Warrant
Price as would have been obtained had an adjustment been made upon the issuance
of such rights, options, or warrants not exercised prior to such change, or
securities not exercised or exchanged prior to such change, on the basis of
such change; provided, that no such change shall at any time cause the Warrant
Price hereunder to be greater than the initial Warrant Price.  Any such readjustment shall apply only to
shares of Series A-2 Stock issued upon exercises of this Warrant
taking place after such expiration.  In
case any purchase price may be paid in a consideration part or all of which
shall be in a form other than cash, the value of

 

4

such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
conclusive absent manifest error.  Shares
of Series A-2 Stock owned by or held for the account of the Company or any
majority-owned subsidiary shall not be deemed outstanding for the purpose of
any such computation.

(c)           In
case the Company shall distribute to all holders of Series A-2 Stock (other
than such distribution made to the stockholders of the Company in connection
with a consolidation or merger to which Section 6(e) is applicable or a
reclassification or recapitalization to which Section 6(j) is applicable)
evidences of its indebtedness or assets or any shares of its capital stock
(other than cash dividends or distributions and dividends payable in shares of
Series A-2 Stock or securities convertible into Series A-2 Stock), or rights,
options, or warrants to subscribe for or purchase Series.  A-2 Stock or securities convertible into or
exchangeable for shares of Series A-2 Stock (excluding those with
respect to the issuance of which an adjustment of the Warrant Price is provided
pursuant to Section 6(a) or Section 6(b) hereof), then, in each case, the
holders of the Warrant shall be entitled to a proportionate share of any such
distribution as though they were actual holders of the numbers of shares of
Series A-2 Stock for which their respective Warrants are exercisable
as of the record or issue date for the distribution in question.  Any such distribution to the holders of the
Warrants shall be made whenever any of the corresponding distribution is made,
and shall become effective on the record or issue date for the determination of
stockholders entitled to receive such corresponding distribution.

(d)           In
case the Company shall issue, sell or exchange shares of Series A-2 Stock or
rights, options, or warrants to subscribe for or purchase Series A-2 Stock, or
securities convertible into or exchangeable for Series A-2 Stock (excluding
shares, rights, options, warrants, or convertible or exchangeable securities
issued or issuable in any of the transactions with respect to which an
adjustment of the Warrant Price is provided pursuant to Sections 8(a), 8(b),
and 8(c) above) at a Net Consideration Per Share, as applicable, lower than the
Warrant Price in effect immediately prior to such issuance, then the Warrant
Price shall be reduced on the date of such issuance to a price (calculated to
the nearest cent) determined according to the following formula:

	
   

  	
   

  	
   

  	
  OSC

  	
   + 

  	
   

  	
  $$$

  
	
   

  	
  ACP

  	
   = 

  	
   PCP 

  	
   X 

  	
   

  	
  PCP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  OSS

  
									

 

where ACP is the adjusted Warrant Price,

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

                OSC
is the number of shares of Series A-2 Stock outstanding immediately prior to
such issuance,

                OSS
is the number of shares of Series A-2 Stock outstanding immediately subsequent
to such issuance, and

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

Any adjustment under this Section 6(d) shall become
effective at the close of business on the relevant record or issue date.  For the purpose of all such adjustments
hereunder, the maximum number of shares of Series A-2 Stock which
the holders of any such rights, options, warrants, or convertible or
exchangeable securities shall be entitled to subscribe for or purchase or
convert or exchange such securities into shall be deemed to be issued and
outstanding.  No further adjustment of
the Warrant Price shall be made as a result of the actual issuance of shares of
Series A-2 Stock on exercise of such rights, options, or warrants or on exercise
or exchange of such convertible or exchangeable securities.  On the expiration or the termination of such
rights, options or warrants, or the termination of such right to convert or
exchange, the Warrant Price shall be readjusted to such Warrant Price as would
have been obtained had the adjustments made upon the issuance of such rights,
options, warrants, or

 

5

convertible or exchangeable securities been made upon
the basis of the delivery of only the number of shares of Series A-2 Stock
actually delivered upon the exercise of such rights, options, or warrants or
upon the exercise or exchange of any such securities.  On any change of the number of shares of
Series A-2 Stock deliverable upon the exercise of any such rights, options, or
warrants or exercise or exchange of such convertible or exchangeable securities
or any change in the consideration to be received by the Company upon such
exercise, exercise, or exchange, including, but not limited to, a change
resulting from the antidilution provisions thereof, the Warrant Price, as then
in effect, shall forthwith be readjusted to such Warrant Price as would have
been obtained had an adjustment been made upon the issuance of such rights,
options, or warrants not exercised prior to such change, or securities not
exercised or exchanged prior to such change, on the basis of such change;
provided that no such change shall at any time cause the Warrant Price
hereunder to be greater than the initial Warrant Price.  Any readjustment under the preceding two
sentences shall apply only to shares of Series A-2 Stock issued upon exercises
of this Warrant taking place after such expiration or change.  In case the Company shall issue shares of
Series A-2 Stock or any such rights, options, warrants, or convertible or
exchangeable securities for a consideration consisting, in whole or in part, of
property other than cash or its equivalent, then the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company, whose determination shall be conclusive absent manifest error.  Shares of Series A-2 Stock owned by or held
for the account of the Company or any majority-owned subsidiary shall not be
deemed outstanding for the purpose of any such computation.

(e)           In
case at any time the Company shall be a party to any transaction in which the
previously outstanding Series A-2 Stock shall be exercised or changed into or
exchanged for securities of another corporation or interests in a non-corporate
entity or other property (including cash) or any combination of the foregoing
(each such transaction being herein called a “Transaction”), then, if a
holder of a Warrant shall so elect, as a condition of the consummation of the
Transaction, lawful and adequate provision shall be made so that the Warrant
held by such holder shall be exercised into an equal number of securities of
such other corporation or entity that have economic rights, voting powers
(including rights with respect to election of directors), preferences, and
other special rights, privileges, powers or immunities substantially identical
to the Warrant and that provide, upon the exercise thereof at any time on or
after the consummation of the Transaction, for the receipt of securities, cash or
other property to which such holder would have been entitled upon consummation
of the Transaction if such holder had exercised such Warrant immediately prior
thereto (subject to adjustments from and after the consummation date as nearly
equivalent as possible to the adjustments provided for in this Section 6).  The Company will not effect any Transaction
unless prior to the consummation thereof each corporation or entity which may
be required to deliver any securities or other property upon the exercise of
the Warrant as provided herein shall assume the obligation to deliver to such
holder such securities or other property as, in accordance with the foregoing
provisions, such holder may be entitled to receive.  The foregoing provisions of this Section 6(e)
shall similarly apply to successive mergers, consolidations, sales of assets,
liquidations and recapitalizations.

(f)            No
adjustment in the Warrant Price shall be required if such adjustment is less
than $.0025; provided, however, that any adjustments which by
reason of this Section 6(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.

(g)           Upon
each adjustment of the Warrant Price as a result of the calculations made in
Section 6(b), 6(c) or 6(d) hereof, any certificate evidencing the Warrant shall
thereafter be exercised, at the adjusted Warrant Price, for a number of shares
calculated to the next thousandth as follows: 
First, multiply the “old” number of shares of Series A-2 Stock then
obtainable through exercise in full of the Warrant by the “old” Warrant
Price.  Second, divide the result by the “new”
Warrant Price.  “Old” refers to the
number of shares and Warrant Price in effect immediately prior to the
adjustment, and “new” refers to the Warrant Price in effect immediately
following the adjustment.

(h)           Whenever
there shall be an adjustment as provided in this Section 6, the Company shall
promptly cause written notice thereof to be sent by registered mail, postage
prepaid, to each holder of Warrants, at its address as it shall appear in the
Company’s stock records, which notice shall be accompanied by an officer’s
certificate setting forth the Warrant Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment and the
computation thereof, which officer’s certificate shall be conclusive evidence
of the correctness of any such adjustment absent manifest error.

 

6

(i)            The
Company shall not be required to issue fractions of shares of Series A-2 Stock
or other capital stock of the Company upon exercise of the Warrant.  If any fraction of a share would be issuable
on exercise, the Company shall purchase such fraction for an amount in cash
equal to the same fraction of the fair market value of a share of Series A-2
Stock on the date of exercise.

(j)            If
the Series A-2 Stock issuable upon the exercise of the Warrant shall be changed
into the same or different number of shares of any class or classes of stock,
whether by reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend provided for above), then and in each
such event the holder of the Warrant shall have the right thereafter, upon
exercise in full thereof, to obtain the kind and amount of shares of stock and
other securities and property receivable upon such reorganization,
reclassification or other change, by holders of the number of shares of Series
A-2 Stock for which the Warrant could have been exercised in full immediately
prior to such reorganization, reclassification or change, appropriately
prorated to reflect any partial exercise of the Warrant, all subject to further
adjustment as provided herein.

(k)           All
calculations under this Section 6 shall be made to the nearest cent or to the
nearest one thousandth (1/1000) of a share, as the case may be.

(l)            No
adjustment in the Warrant Price shall be required if such adjustment would
result from the issuance of any of the following:  (A) shares of Series A-2 Stock issued upon exercise
of the Warrant, (B) shares of Series A-2 Stock or options, warrants or other
rights to purchase Series A-2 Stock issued or granted to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary
pursuant to stock purchase or stock option plans or other arrangements approved
by the Board of Directors; (C) shares of Series A-2 Stock issued pursuant to
the exercise of options, warrants or other rights to purchase Series A-2 Stock
or exercise of convertible securities outstanding on the date hereof or granted
in accordance with clause (B) above; (D) shares of Series A-2 Stock and/or
rights, options or warrants to purchase Series A-2 Stock, and the Series A-2
Stock issued pursuant to such options, warrants or other rights issued for
consideration other than cash pursuant to a merger, consolidation, acquisition
or similar business combination approved by the holders of 66-2/3% of the
outstanding shares of the Company’s Series A-2 Convertible Preferred Stock, par
value $.001 per share, par value $.001 per share; (E) shares of Series A-2
Stock issued pursuant to any bona fide equipment leasing arrangement, or debt
financing from a bank or similar financial institution approved by the Board of
Directors of the Company (including by all of the members thereof who were
designated by holders of the aforementioned Preferred Stock); and (F)
securities issued in a transaction with a vendor, customer or strategic
partner, up to a maximum of either (i) 0.5% of outstanding shares of Series A-2
Stock on a fully diluted basis in a single transaction or (ii) 2.0% of
outstanding shares of Series A-2 Stock on a fully diluted basis in the
aggregate.

(m)          In
any case in which the provisions of this Section 6 shall require that an
adjustment shall become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event issuing to Holder of
all or any part of this Warrant which is exercised after such record date and
before the occurrence of such event the additional shares of capital stock
issuable upon such exercise by reason of the adjustment required by such event
over and above the shares of capital stock issuable upon such exercise before
giving effect to such adjustment exercise; provided, however, that the Company
shall deliver to such Holder a due bill or other appropriate instrument
evidencing such Holder’s right to receive such additional shares upon the
occurrence of the event requiring such adjustment.

7.             Ownership.

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

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

 

7

the name of Holder, if a
partial transfer is effected) shall be made and delivered by the Company upon
surrender of this Warrant duly endorsed, at the office of the Company referred
to in Section 14 hereof, together with a properly executed Assignment (in the
form of Exhibit B or Exhibit C hereto, as the case may be).  Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft or destruction, and, in such
case, of indemnity or security reasonably satisfactory to it, and upon
surrender of this Warrant if mutilated, the Company shall make and deliver a
new Warrant of like tenor, in lieu of this Warrant.  This Warrant shall be promptly cancelled by
the Company upon the surrender hereof in connection with any transfer or
replacement.  Except as otherwise
provided above, in the case of the loss, theft or destruction of a Warrant, the
Company shall pay all expenses, taxes and other charges payable in connection
with any transfer or replacement of this Warrant, other than stock transfer
taxes (if any) payable in connection with a transfer of this Warrant, which
shall be payable by Holder.  Holder shall
not transfer this Warrant and the rights hereunder except in compliance with
federal and state securities laws.

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

9.                                      Notice of Dissolution or
Liquidation.  In case of any distribution of the assets of
the Company in dissolution or liquidation (except under circumstances when the
foregoing Section 8 shall be applicable), the Company shall give notice thereof
to Holder hereof and shall make no distribution to shareholders until the
expiration of thirty (30) days from the date of mailing of the aforesaid notice
and, in any case, Holder hereof may exercise this Warrant within thirty (30)
days from the date of the giving of such notice, and all rights herein granted
not so exercised within such thirty-day period shall thereafter become null and
void.

10.                               Notice of Extraordinary
Dividends.  If the Board of Directors of the Company shall
declare any dividend or other distribution on its Series A-2 Stock except out
of earned surplus or by way of a stock dividend payable in shares of its Series
A-2 Stock, the Company shall mail notice thereof to Holder hereof not less than
thirty (30) days prior to the record date fixed for determining shareholders
entitled to participate in such dividend or other distribution, and Holder
hereof shall not participate in such dividend or other distribution unless this
Warrant is exercised prior to such record date. 
The provisions of this Section 10 shall not apply to distributions made
in connection with transactions covered by Section 8.

11.                               Fractional Shares.  Fractional
shares shall not be issued upon the exercise of this Warrant but in any case
where Holder would, except for the provisions of this Section 11, be entitled
under the terms hereof to receive a fractional share upon the complete exercise
of this Warrant, the Company shall, upon the exercise of this Warrant for the
largest number of whole shares then called for, pay a sum in cash equal to the
excess of the value of such fractional share (determined in such reasonable
manner as may be prescribed in good faith by the Board of  Directors of the Company) over the Warrant
Price for such fractional share.

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

12.1                        Shall Not Amend
Certificate.  the Company shall not amend its certificate or
articles, as the case may be, of incorporation to eliminate as an authorized
class of capital stock that class denominated as “Series A-2 Stock” on the date
hereof.

 

8

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

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

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

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

16.                               Amendments.  This Warrant
and any provision hereof may be changed, waived, discharged or terminated only
by an instrument in writing signed by both parties (or any respective
predecessor in interest thereof).  The
headings in this Warrant are for purposes of reference only and shall not
affect the meaning or construction of any of the provisions hereof.

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

	
   

  	
  Vonage Holdings
  Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  s/s Robinson
  Markel

  
	
   

  	
  Title:

  	
  Secretary

  
					

 

 

9

 

EXHIBIT A

FORM OF NOTICE OF EXERCISE

[To be signed only upon
exercise of the Warrant]

TO BE EXECUTED BY THE
REGISTERED HOLDER

TO EXERCISE THE ATTACHED WARRANT

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

[check appropriate box(es)]

N             makes payment of $                    
therefor in cash;

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

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

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

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

 

	
   

  	
   

  
	
   

  	
  [Type Name of
  Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
						

 

10

 

EXHIBIT B

FORM OF ASSIGNMENT

(ENTIRE)

[To be signed only upon
transfer of entire Warrant]

TO BE EXECUTED BY THE
REGISTERED HOLDER

TO TRANSFER THE ATTACHED WARRANT

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

 

 

	
   

  	
   

  
	
   

  	
  [Type Name of
  Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
						

 

NOTICE:

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

11

 EXHIBIT C

FORM OF ASSIGNMENT

(PARTIAL)

[To be signed only upon
partial transfer of Warrant]

TO BE EXECUTED BY THE
REGISTERED HOLDER

TO TRANSFER THE ATTACHED WARRANT

FOR
VALUE RECEIVED                           
hereby sells, assigns and transfers unto                              
(i) the rights of the undersigned to purchase             
shares of Series A-2 Convertible Preferred Stock, par value $.001 per share
under and pursuant to the attached Warrant, and (ii) on a non-exclusive basis,
all other rights of the undersigned under and pursuant to the attached Warrant,
it being understood that the undersigned shall retain, severally (and not
jointly) with the transferee(s) named herein, all rights assigned on such
non-exclusive basis.  The undersigned
does hereby irrevocably constitute and appoint                           
Attorney to transfer said Warrant on the books of Vonage Holdings Corp., with
full power of substitution.

 

 

	
   

  	
   

  
	
   

  	
  [Type Name of
  Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
						

 

NOTICE:

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

 

12

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