UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 2018 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From ______to ______

Commission File Number 001-32887 VONAGE HOLDINGS CORP. (Exact name of registrant as specified in its charter)

Delaware 11-3547680 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.)

23 Main Street, Holmdel, NJ 07733 (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (732) 528-2600 (Former name, former address and former fiscal year, if changed since last report): Not Applicable

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer x Accelerated filer o

Non-accelerated filer o Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class Outstanding at October 31, 2018 Common Stock, par value $0.001 239,580,512 shares

VONAGE HOLDINGS CORP.

INDEX

Part 1 - Financial Information

Page Item 1. Condensed Consolidated Financial Statements and Notes Condensed Consolidated Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017 3 Unaudited Condensed Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2018 and 2017 4 Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2018 and 2017 5 Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 6 Unaudited Condensed Consolidated Statement of Stockholders’ Equity for the Nine Months Ended September 30, 2018 7 Notes to Unaudited Condensed Consolidated Financial Statements 8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 31

Item 3. Quantitative and Qualitative Disclosures About Market Risk 45

Item 4 Controls and Procedures 46

Part II. Other Information

Item 1. Legal Proceedings 47

Item 1A. Risk Factors 47

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47

Item 3. Defaults Upon Senior Securities 47

Item 4. Mine Safety Disclosures 47

Item 5. Other Information 47

Item 6. Exhibits 48

Signature 49

Financial Information Presentation For the financial information discussed in this Quarterly Report on Form 10-Q, other than per share and per line amounts, dollar amounts are presented in thousands, except where noted.

2

PART 1 - FINANCIAL INFORMATION

ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES

VONAGE HOLDINGS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) (Unaudited)

September 30, December 31, 2018 2017 Assets Current assets: Cash and cash equivalents $ 25,735 $ 31,360 Accounts receivable, net of allowance of $2,480 and $2,258, respectively 57,060 44,159 Inventory, net of allowance of $198 and $108, respectively 1,420 2,971 Deferred customer acquisition costs, current portion 10,669 — Prepaid expenses 21,344 23,763 Other current assets 5,363 7,522 Total current assets 121,591 109,775 Property and equipment, net of accumulated depreciation of $97,962 and $87,792, respectively 42,754 46,754 Goodwill 389,490 373,764 Software, net of accumulated amortization of $100,251 and $93,858, respectively 17,828 22,252 Deferred customer acquisition costs 34,821 — Restricted cash 1,984 1,967 Intangible assets, net of accumulated amortization of $151,029 and $124,573, respectively 158,939 173,270 Deferred tax assets 114,757 110,892 Other assets 27,546 20,007 Total assets $ 909,710 $ 858,681 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 26,256 $ 29,766 Accrued expenses 99,232 85,706 Deferred revenue, current portion 27,509 30,255 Current portion of notes payable 10,000 18,750 Total current liabilities 162,997 164,477 Indebtedness under revolving credit facility 114,000 141,000 Notes payable, net of debt related costs and current portion 86,672 72,765 Other liabilities 8,147 7,541 Total liabilities 371,816 385,783 Commitments and Contingencies (Note 7) Stockholders’ Equity: Common stock, par value $0.001 per share; 596,950 shares authorized at September 30, 2018 and December 31, 2017; 309,462 and 298,174 shares issued at September 30, 2018 and December 31, 2017, respectively; 239,523 and 230,939 shares outstanding at September 30, 2018 and December 31, 2017, respectively 310 298 Additional paid-in capital 1,405,991 1,375,391 Accumulated deficit (605,042) (672,561) Treasury stock, at cost, 69,939 shares at September 30, 2018 and 67,235 shares at December 31, 2017 (274,336) (244,239) Accumulated other comprehensive income 10,971 14,009 Total stockholders’ equity 537,894 472,898 Total liabilities and stockholders’ equity $ 909,710 $ 858,681 See accompanying notes to condensed consolidated financial statements.

3

VONAGE HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) (Unaudited)

Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017

Total revenues $ 261,531 $ 253,083 $ 774,979 $ 748,266

Operating Expenses: Cost of revenues (exclusive of depreciation and amortization) 104,351 102,938 315,122 301,688 Sales and marketing 74,380 73,576 229,201 235,245 Engineering and development 14,309 6,956 35,504 21,996 General and administrative 37,620 26,811 97,376 98,411 Depreciation and amortization 16,024 18,179 51,886 54,520 Total operating expenses 246,684 228,460 729,089 711,860 Income from operations 14,847 24,623 45,890 36,406 Other Income (Expense): Interest expense (3,036) (3,821) (9,294) (11,385) Other income (expense), net 347 468 431 943 Total other income (expense), net (2,689) (3,353) (8,863) (10,442) Income before income taxes 12,158 21,270 37,027 25,964 Income tax (expense) benefit (2,570) (10,668) 5,644 (4,624) Net income $ 9,588 $ 10,602 $ 42,671 $ 21,340

Earnings per common share: Basic $ 0.04 $ 0.05 $ 0.18 $ 0.10 Diluted $ 0.04 $ 0.04 $ 0.17 $ 0.09 Weighted-average common shares outstanding: Basic 239,303 227,943 236,775 223,956 Diluted 249,516 242,720 248,780 242,552

See accompanying notes to condensed consolidated financial statements.

4

VONAGE HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME / (LOSS) (In thousands) (Unaudited)

Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017

Net income $ 9,588 $ 10,602 $ 42,671 $ 21,340 Other comprehensive income (loss): Foreign currency translation adjustment, net of tax (benefit) expense of ($2,346), $822, ($3,702), and $3,258, respectively 1,525 6,390 (4,576) 23,622 Unrealized gain on available-for-sale securities, net of tax expense of $0, $0, $0, and $0, respectively — — — 1 Unrealized gain on derivatives, net of tax benefit of $745, $0, $354, and $0, respectively 530 197 1,538 197 Total other comprehensive income (loss) 2,055 6,587 (3,038) 23,820 Comprehensive income $ 11,643 $ 17,189 $ 39,633 $ 45,160

See accompanying notes to condensed consolidated financial statements.

5

VONAGE HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

Nine Months Ended September 30, 2018 2017 Cash flows from operating activities: Net income $ 42,671 $ 21,340 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 24,412 25,930 Amortization of intangibles 27,306 28,458 Deferred income taxes (9,506) 2,475 Amortization of deferred customer acquisition costs 7,002 — Allowance for doubtful accounts and obsolete inventory 1,643 901 Amortization of debt issuance costs 764 300 Gain on sale of business — (1,377) Loss on disposal of fixed assets 168 132 Loss on extinguishment of debt 14 — Share-based expense 24,495 28,997 Changes in derivatives (65) — Changes in operating assets and liabilities, net of acquisitions: Accounts receivable (15,085) (3,970) Inventory 1,274 1,156 Prepaid expenses and other current assets 6,416 4,653 Deferred customer acquisition costs (18,008) — Accounts payable and accrued expenses 6,898 (31,002) Deferred revenue (2,704) (1,477) Other assets and liabilities (3,232) 4,084 Net cash provided by operating activities 94,463 80,600 Cash flows from investing activities: Capital expenditures (10,687) (15,790) Maturities and sales of marketable securities — 602 Acquisition and development of software assets (6,198) (9,438) Acquisition of business, net of cash acquired (32,299) — Proceeds from sale of business — 1,000 Net cash used in investing activities (49,184) (23,626) Cash flows from financing activities: Principal payments on capital lease obligations and other financing obligations (119) (5,701) Payments on notes and revolving credit facility (293,688) (56,063) Proceeds received from issuance of revolving credit facility and term note 272,000 15,000 Payment of debt issuance costs (3,376) — Common stock repurchases — (9,542) Employee taxes paid on withholding shares (31,064) (14,927) Proceeds from exercise of stock options 6,117 14,476 Net cash used in financing activities (50,130) (56,757) Effect of exchange rate changes on cash (757) 550 Net (decrease) increase in cash, cash equivalents, and restricted cash (5,608) 767 Cash, cash equivalents, and restricted cash, beginning of period 33,327 30,929 Cash, cash equivalents, and restricted cash, end of period $ 27,719 $ 31,696 Supplemental disclosures of cash flow information: Cash paid during the periods for: Interest $ 8,454 $ 10,147 Income taxes $ 5,669 $ 5,395 Non-cash investing activities: Capital expenditures included in accounts payable and accrued liabilities $ 1,840 $ 2,231

See accompanying notes to condensed consolidated financial statements. 6

VONAGE HOLDINGS CORP. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (In thousands) (Unaudited)

Accumulated Additional Other Common Paid-in Accumulated Treasury Comprehensive Shares Stock Capital Deficit Stock Income Total Balance at December 31, 2017 230,939 $ 298 $ 1,375,391 $ (672,561) $ (244,239) $ 14,009 $ 472,898 Cumulative effect adjustment upon the adoption of Topic 606 24,848 24,848 Stock option exercises 11,288 12 6,105 6,117 Share-based expense 24,495 24,495 Employee taxes paid on withholding shares (2,704) (30,097) (30,097) Foreign currency translation adjustment (4,576) (4,576) Unrealized gain on derivatives 1,538 1,538 Net income 42,671 42,671 Balance at September 30, 2018 239,523 $ 310 $ 1,405,991 $ (605,042) $ (274,336) $ 10,971 $ 537,894

See accompanying notes to condensed consolidated financial statements.

7 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Note 1. Nature of Business Nature of Operations Vonage Holdings Corp. (“Vonage”, “Company”, “we”, “our”, “us”) is incorporated as a Delaware corporation. At Vonage, we are redefining business communications. We are embracing technology to transform how businesses communicate to create better business outcomes. Our cloud communications platform enables businesses of all sizes to collaborate more productively and engage their customers more efficiently across any device. All of our cloud communications solutions are designed to allow businesses to be more productive by integrating communications with all their existing business productivity tools and our programmable solutions allow customers to engage with their customers via embedded voice, chat, or messaging to create seamless and contextual communications that makes doing business easier for end customers. For our business customers, we provide innovative, cloud-based Unified Communications as a Service, or UCaaS, solutions, comprised of integrated voice, text, video, data, collaboration, and mobile applications over our flexible, scalable Session Initiation Protocol, or SIP, based Voice over Internet Protocol, or VoIP, network. We also offer Communications Platform as a Service, or CPaaS, solutions designed to enhance the way businesses communicate with their customers by embedding communications into apps, websites and business processes. In combination, our products and services permit our business customers to communicate with their customers and employees through any cloud-connected device, in any place, at any time without the often costly investment required with on-site equipment. We provide a robust suite of feature-rich residential communication solutions that allow consumers to connect their home phones and mobile phones on one number and we offer attractive international long distance rates that help create a loyal base of satisfied customers. Customers in the United States represented 79% and 84% of our consolidated revenues for the three months ended September 30, 2018 and 2017 and 80% and 86% for the nine months ended September 30, 2018 and 2017, respectively, with the balance in Canada, the United Kingdom, China, Singapore, Netherlands, and many other countries around the world.

Unaudited Interim Financial Information The accompanying unaudited interim condensed consolidated financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with the SEC's regulations for interim financial information and with the instructions for Form 10-Q. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these financial statements contain all normal and recurring adjustments considered necessary to present fairly the Company's financial position, results of operations, comprehensive income, cash flows, and stockholders’ equity for the periods presented. The results for the three and nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the full year.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities and Exchange Commission on February 27, 2018.

Use of Estimates Our condensed consolidated financial statements and notes thereof are prepared in conformity with accounting principles generally accepted in the United States, which require management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Actual results could differ materially from these estimates.

Reclassifications Reclassifications have been made to our condensed consolidated financial statements for the prior year periods to conform to classifications used in the current year periods. The reclassifications did not affect results of operations or net assets.

8 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Note 2. Summary of Significant Accounting Policies This footnote should be read in conjunction with the complete description of our significant accounting policies under Note 2, Summary of Significant Accounting Policies to our Annual Report on Form 10-K for the year ended December 31, 2017.

Cost of Revenues Cost of revenues excludes depreciation and amortization expense of $6,386 and $6,852 for the three months ended September 30, 2018 and 2017 and $19,046 and $20,497 for the nine months ended September 30, 2018 and 2017, respectively. In addition, costs of goods sold included in cost of revenues during the three months ended September 30, 2018 and 2017 were $6,386 and $6,306 and during the nine months ended September 30, 2018 and 2017 were $18,854 and $19,786, respectively.

Advertising Costs We incurred advertising costs which are included in sales and marketing of $12,883 and $11,423 for the three months ended September 30, 2018 and 2017 and $41,805 and $43,760 for the nine months ended September 30, 2018 and 2017, respectively.

Engineering and Development Expenses Engineering and development expenses predominantly include personnel and related costs for developers responsible for research and development of new products.

Fair Value of Financial Instruments The Company records certain of its financial assets at fair value on a recurring basis as described below. Certain of the Company's other financial instruments, which include cash and cash equivalents, accounts receivable and accounts payable, approximate fair value because of their short-term maturities. The carrying amounts of our capital leases approximate fair value of these obligations based upon management’s best estimates of interest rates that would be available for similar debt obligations at September 30, 2018 and December 31, 2017. We believe the fair value of our debt at September 30, 2018 and December 31, 2017 was approximately the same as its carrying amount as market conditions, including available interest rates, credit spread relative to our credit rating, and illiquidity, remain relatively unchanged from the issuance date of our debt obligations for a similar debt instrument and are classified as Level 3 within the fair value hierarchy.

We account for financial assets using a framework that establishes a hierarchy that ranks the quality and reliability of the inputs, or assumptions, we use in the determination of fair value, and we classify financial assets and liabilities carried at fair value in one of the following three categories: • Level 1 - quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets and liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. • Level 2 - observable prices that are based on inputs not quoted on active markets but corroborated by market data; and • Level 3 - unobservable inputs when there is little or no market data available, thereby requiring an entity to develop its own assumptions. The fair value hierarchy gives the lowest priority to Level 3 inputs. The following table presents the assets that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of September 30, 2018 and December 31, 2017:

September 30, 2018 December 31, 2017 Level 2 Measurements Interest rate swaps (1) $ 2,805 $ 1,285

(1) Included in other assets on our condensed consolidated balance sheets.

9 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Supplemental Balance Sheet Information

Cash, cash equivalents and restricted cash

September 30, 2018 December 31, 2017 Cash and cash equivalents $ 25,735 $ 31,360

Cash collateralized letter of credit - lease deposits 1,513 1,563 Cash reserves 471 404 Restricted cash 1,984 1,967

Cash, cash equivalents, and restricted cash $ 27,719 $ 33,327

Intangible assets, net

September 30, 2018 December 31, 2017 Customer relationships $ 108,224 $ 122,393 Developed technology 47,574 46,004 Patents and patent licenses 2,893 4,030 Trade names 25 352 Non-compete agreements 223 491 Intangible assets, net $ 158,939 $ 173,270

Accrued expenses

September 30, 2018 December 31, 2017 Compensation and related taxes and temporary labor $ 28,331 $ 30,059 Marketing 11,592 10,759 Taxes and fees 16,982 13,353 Acquisition related consideration accounted for as compensation — 2,534 Telecommunications 20,686 16,068 Other accruals 7,200 7,078 Customer credits 2,800 2,310 Professional fees 10,313 1,618 Inventory 1,328 1,927 Accrued expenses $ 99,232 $ 85,706

Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-04, "Intangibles - Goodwill and Other". The ASU simplifies the subsequent measurement of goodwill and eliminates Step 2 from the goodwill impairment test. This ASU is effective for an annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019 on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The adoption of ASU 2017-04 will not have a material impact on our condensed consolidated financial statements and related disclosures.

10 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

In February 2016, FASB issued ASU 2016-02, "Leases". This ASU increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about their leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, using a modified retrospective transition method at the beginning of the earliest period presented in the financial statements. Early adoption is permitted for all entities. The adoption of this ASU will increase our assets and liabilities for real estate and equipment operating leases for which we are the lessee and increase our lease disclosures. In July 2018, FASB issued ASU 2018- 11, “Leases (Topic 842): Targeted Improvements,” and ASU 2018-10, “Codification Improvements to Topic 842, Leases”, both of which affect narrow aspects of the guidance issued in ASU 2016-02. In addition, ASU 2018-11 provides an additional (and optional) transition method upon adoption of ASU 2016-02 to initially apply the new lease standard at the adoption date by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption in lieu of the comparative reporting initially required under ASU 2016-02. We have substantially completed our review of contracts in the scope of Topic 842 and are currently evaluating the financial impact of the guidance on our financial statements. While this review is still in the process, the Company expects the adoption of Topic 842 will have a material impact on its balance sheet. Additionally, the Company plans to utilize the transition method provided by ASU 2018-11 and will recognize the cumulative effect of the adoption in retained earnings as of January 1, 2019. The following standards were adopted by the Company during the current period: In August 2018, FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force)”. Under this ASU, a customer in a cloud computing arrangement that is a service contract would look to existing guidance for internal-use software under ASC 350-40 to determine whether implementation costs incurred under such arrangement may be capitalized and subsequently amortized over the periods covered under any applicable renewal options that are reasonably certain to be exercised. In addition, the guidance in this ASU also require the entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element (service) of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted, including adoption in any interim period. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company early adopted this ASU on a retrospective basis and began capitalizing implementation costs associated with cloud computing arrangements entered into that are service contracts. The adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures. In October 2016, FASB issued ASU 2016-16, "Income Taxes". This ASU improves the accounting for income tax consequences of intra-entity transfers of assets other than inventory. This ASU is effective for fiscal years beginning after December 15, 2017 on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. We adopted this ASU on January 1, 2018 and the adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures. In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows". This ASU addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. This ASU is effective for fiscal years beginning after December 15, 2017 on a retrospective basis. Early adoption is permitted, including adoption in an interim period. We adopted this ASU on January 1, 2018 and the adoption of this ASU did not have a material impact on our condensed consolidated financial statements and related disclosures. In May 2014, FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)". This ASU, as amended, provided comprehensive guidance on the recognition of revenue from contracts with customers arising from the transfer of goods and services, guidance on accounting for certain contract costs and new disclosures. Topic 606 also amends the current guidance for the recognition of costs to obtain and fulfill contracts with customers requiring that all incremental costs of obtaining and direct costs of fulfilling contracts with customers such as commissions be deferred and recognized over the expected customer life. On January 1, 2018, we adopted this ASU. Refer to Note 3. Revenue Recognition for related disclosures required upon adoption.

11 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

In August 2017, FASB issued ASU 2017-12, "Derivatives and Hedging". The ASU improves the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements and simplifies the application of the hedge accounting guidance in current generally accepted accounting principles ("GAAP"). It also amends the disclosures requirements by requiring a tabular disclosure related to the effect on the incomes statement of fair value and cash flow hedges and eliminating the ineffective portion of the change in fair value of hedging instrument disclosures. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted in any interim period after issuance and is applied to hedging relationships existing on the date of adoption. We adopted ASU 2017-12 during the third quarter of 2018 and the adoption did not have a material impact on our condensed consolidated financial statements and related disclosures.

Note 3. Revenue Recognition On January 1, 2018, the Company adopted the guidance of ASC Topic 606, Revenue from Contracts with Customers using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Our results for reporting periods beginning after January 1, 2018 are presented in accordance with the provisions under Topic 606 but any prior period amounts have not been adjusted and continue to be reported in accordance with our revenue recognition policy as further described in Note 2, Summary of Significant Accounting Policies to our Annual Report on Form 10-K for the year ended December 31, 2017. In connection with our adoption of Topic 606, we recognized a net increase to opening retained earnings of $24,848, net of tax, as of January 1, 2018 related to commissions paid associated with the acquisition of business customers and associated deferred tax liability.

Upon our adoption of Topic 606, we measure revenue based upon consideration specified by contracts with our customers. Revenue is recognized when our performance obligation under the contract is satisfied by transferring control over the product or service to the customer. We derive our revenues for our Consumer and Business segments primarily from the sale of our communication services and customer equipment as further described below. The majority of the Company's contracts with customers have a single performance obligation for service revenues. We recognize revenue with customers when control transfers, which occurs upon delivery of a service or product. For our Business segment, the typical life of a customer for service is six years. The adoption of Topic 606 did not result in a change in the timing of how the Company recognizes revenue.

Service Revenues

Substantially all of our revenues are service revenues, which are derived from monthly subscription fees under usage based or pay-per-use type billing arrangements, and contract-based services plans. For consumer customers in the United States, we offer domestic and international rate plans, including a variety of residential plans and mobile plans. For business customers, we offer small and medium business, mid-market, and enterprise customers several service plans with different pricing structures and contractual requirements ranging in duration from month-to-month to three years. In addition, we provide managed equipment to business customers for a monthly fee. Customers also have the opportunity to purchase premium features for additional fees. We also derive service revenues from per minute fees for international calls if not covered under a plan, including calls made via applications for mobile devices and other stand-alone products, and for any calling minutes in excess of a customer's monthly plan limits. For a portion of our customers, monthly subscription fees are automatically charged to customers' credit cards, debit cards or electronic check payments ("ECP"), in advance and are recognized over the following month as service is provided.

Service revenue also includes supplying messaging (SMS and Voice) services to customers as part of our CPaaS offerings. Revenue is recognized in the period when messages are sent by the customer. We also transact with providers or bulk SMS aggregators and sell services to these customers who then onsell to their customers. Since the aggregator is our customer, revenue is recognized on a gross basis with related costs included in cost of revenues.

In the United States, we charge regulatory, compliance, E-911 and intellectual property-related fees on a monthly basis to defray costs and to cover taxes that we are charged by the suppliers of telecommunications services. These charges, along with the remittance to the relevant government entity, are recorded on a net basis. In addition, we charge customers Federal Universal Service Fund ("USF") fees from customers to recover our obligation to contribute to the fund, as allowed by the Federal Communications Commission ("FCC"). We recognize USF revenue on a gross basis and record the related fees in cost of revenues.

Customer Equipment and Shipping Revenues

Revenues are generated from sales of customer equipment directly to customers for replacement devices, or for upgrading their device at the time of customer sign-up for which we charge an additional fee. In addition, customer equipment and shipping revenues include revenues from the sale of VoIP telephones in order to access our small and medium business services. Customer equipment and shipping revenues also include the fees that customers are charged for shipping their customer equipment to them.

12 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Disaggregation of Revenue

The following table details our revenue from customers disaggregated by primary geographical market, source of revenue, and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue for our Business and Consumer segments.

Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Business Consumer Total Business Consumer Total Primary geographical markets United States $ 107,446 $ 99,061 $ 206,507 $ 311,562 $ 309,056 $ 620,618 Canada 919 5,781 6,700 2,293 18,275 $ 20,568 United Kingdom 6,505 3,054 9,559 20,315 9,503 $ 29,818 Other Countries (1) 38,765 — 38,765 103,975 — $ 103,975 153,635 107,896 261,531 438,145 336,834 774,979 Major Sources of Revenue Service revenues $ 133,709 $ 97,093 $ 230,802 $ 377,703 $ 301,954 $ 679,657 Access and product revenues 12,427 92 12,519 37,674 472 38,146 USF revenues 7,499 10,711 18,210 22,768 34,408 57,176 153,635 107,896 261,531 438,145 336,834 774,979

(1) No individual other international country represented greater than 10% of total revenue during the periods presented.

In addition, the Company recognizes service revenues from its customers through subscription services provided or through usage or pay-per-use type arrangements. During the three months ended September 30, 2018, the Company recognized $149,091 related to subscription services, $63,857 related to usage, and $48,583 related to other revenues such as USF, other regulatory fees, and credits. During the nine months ended September 30, 2018, the Company recognized $452,257 related to subscription services, $175,764 related to usage, and $146,958 related to other revenues such as USF, other regulatory fees, and credits.

Contract Assets and Liabilities

The following table provides information about receivables and contract liabilities from contracts with customers:

September 30, 2018 Receivables (1) $ 57,060 Contract liabilities (2) 27,509

(1) Amounts included in accounts receivables on our condensed consolidated balance sheet.

(2) Amounts included in deferred revenues and other liabilities on our condensed consolidated balance sheet.

Our deferred revenue represents the advance consideration received from customers for subscription services and is predominantly recognized over the following month as transfer of control occurs. During the three and nine months ended September 30, 2018, the Company recognized revenue of $105,494 and $332,480, respectively, related to its contract liabilities. We expect to recognize $27,509 into revenue over the next twelve months related to our deferred revenue as of September 30, 2018.

13 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Contract Acquisition Costs

We have various commission programs for which eligible employees and third parties may earn commission on sales of services and products to customers. We expect that these commission fees are recoverable and, therefore, we have capitalized $45,490 (net of accumulated amortization) and $34,484 as contract costs as of September 30, 2018 and January 1, 2018, respectively, included within deferred customer acquisitions costs, current and deferred customer acquisition costs on our condensed consolidated balance sheet. In addition, we established a deferred tax liability associated with the transition asset of $9,636. Capitalized commission fees are amortized to sales and marketing expense over estimated customer life, which is six years for Business customers. During the three and nine months ended September 30, 2018, the amounts amortized to sales and marketing were $2,579 and $7,002, respectively, and there were no impairment losses recognized in relation to the costs capitalized. In addition, the Company expenses sales commissions for commission plans related to customer arrangements deemed less than a year and for residuals and renewals.

Note 4. Earnings Per Share

The following table sets forth the computation for basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017:

Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Numerator Net income $ 9,588 $ 10,602 $ 42,671 $ 21,340 Denominator Basic weighted average common shares outstanding 239,303 227,943 236,775 223,956 Dilutive effect of stock options and restricted stock units 10,213 14,777 12,005 18,596 Diluted weighted average common shares outstanding 249,516 242,720 248,780 242,552 Basic earnings per share Basic earnings per share $ 0.04 $ 0.05 $ 0.18 $ 0.10 Diluted earnings per share Diluted earnings per share $ 0.04 $ 0.04 $ 0.17 $ 0.09

For the three and nine months ended September 30, 2018 and 2017, the following were excluded from the calculation of diluted earnings per common share because of their anti-dilutive effects:

Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Restricted stock units 3,368 4,938 2,200 2,458 Stock options 1,637 5,362 1,013 4,023 5,005 10,300 3,213 6,481

14 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Note 5. Long-Term Note and Revolving Credit Facility This footnote should be read in conjunction with the complete description of our financing arrangements under Note 7, Long-Term Debt and Revolving Credit Facility to our Annual Report on Form 10-K for the year ended December 31, 2017. A schedule of long-term note and revolving credit facility at September 30, 2018 and December 31, 2017 is as follows:

September 30, December 31, 2018 2017 2.00-2.75 Term note - due 2023, net of debt related costs $ 86,672 $ — 2.00-2.75 Revolving credit facility - due 2023 114,000 — 2.50-3.25% Term note - due 2020, net of debt related costs — 72,765 2.50-3.25% Revolving credit facility - due 2020 — 141,000 Total Long-term note and revolving credit facility $ 200,672 $ 213,765

2018 Term Note and Revolving Credit Facility

On July 31, 2018, the Company replaced its 2016 Credit Facility previously consisting of a $125 million term loan and a $325 million revolving credit facility with the 2018 Credit Facility consisting of a $100 million senior secured term loan and a $500 million revolving credit facility. The co-borrowers under the 2018 Credit Facility are the Company and Vonage America Inc., the Company’s wholly owned subsidiary. Obligations under the 2018 Credit Facility are guaranteed, fully and unconditionally, by the Company’s other United States subsidiaries and are secured by substantially all of the assets of each borrower and each guarantor.

The company used $232,000 of the proceeds available under our 2018 Credit Facility plus cash on hand to retire all of the debt outstanding under our 2016 Credit Facility and to cover transaction fees and expenses. Total transaction fees and expense incurred were $3,376, of which $474 was allocated to the term note and $2,813 was allocated to the revolving credit facility which will be amortized over the term of 2018 Credit Facility. The remaining $89 of transaction fees were expensed during the three months ended September 30, 2018. The Company recognized a loss on extinguishment of debt of $14 which primarily consisted of the write off of previously deferred financing costs offset by the realization of a portion of gains associated with the interest rate swaps included in accumulated other comprehensive income. Remaining proceeds available from the undrawn revolving credit facility under our 2018 Credit Facility will be used for general corporate purposes and to fund potential additional acquisitions.

2018 Credit Facility Terms

The following description summarizes the material terms of the 2018 Credit Facility:

The loans under the 2018 Credit Facility mature on July 31, 2023. Principal amounts under the 2018 Credit Facility are repayable in quarterly installments of $2.5 million for the term loan. The unused portion of the Company's revolving credit facility incurs a 0.30% per annum commitment fee.

Outstanding amounts under the 2018 Credit Facility, at the Company's option, will bear interest at:

• LIBOR (applicable to one-, two-, three-, six-, or twelve-month periods) plus an applicable margin equal to 2.00% up to 2.75% per annum payable on the last day of each relevant interest period or, if the interest period is longer than three months, each day that is three months after the first day of the interest period, or

• the base rate determined by reference to the highest of (a) the rate of interest last quoted by the Wall Street Journal as the “Prime Rate” in the U.S., (b) the federal funds effective rate from time to time plus 0.50%, and (c) the adjusted LIBO rate applicable to one month interest periods plus 1.00%, plus an applicable margin equal to 1.00% up to 1.75% per annum payable on the last business day of each March, June, September, and December and the maturity date of the 2018 Credit Facility.

15 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

During the nine months ended September 30, 2018, we made mandatory repayments of $2.5 million under the 2018 term note and made discretionary repayments of $18 million under the 2018 revolving credit facility. In addition, the effective interest rate was 4.50% as of September 30, 2018.

2016 Term Note and Revolving Credit Facility On June 3, 2016, the company entered into Amendment No. 1 to the Amended and Restated Credit Agreement (the “2016 Credit Facility”) consisting of a $125.0 million term note and a $325.0 million revolving credit facility. During the nine months ended September 30, 2018, we made mandatory repayments of $9.4 million under the term note and made discretionary repayments of $35.0 million under the revolving credit facility and borrowed $40.0 million under the revolving credit facility, of which $32.9 million was used in connection with the acquisition of TokBox on August 1, 2018. Interest Rate Swaps On July 14, 2017, we executed on three interest rate swap agreements in order to hedge the variability of expected future cash interest payments related to the 2016 Credit Facility. The swaps have an aggregate notional amount of $150 million and became effective on July 31, 2017 and will expire on June 3, 2020 concurrent with the term of the 2016 Credit Facility. Under the swaps our interest rate is fixed at 4.7%. The interest rate swaps are accounted for as cash flow hedges in accordance with ASC 815, Derivatives and Hedging. In connection with the $14 debt extinguishment, the Company reclassified $271 from accumulated other comprehensive income to earnings. The remaining $2,654 gain accumulated in other comprehensive income will be amortized over the term of the 2018 Credit Facility. The cash flows on the 2018 Credit Facility have been designated and qualify as a cash flow hedge of forecasted interest coupon payments. As of September 30, 2018, the fair market value of the swaps was $2,805, which is included in other assets on our condensed consolidated balance sheet. The following table summarizes the effects of ASC 815 on the Company's accumulated OCI balance attributable to cash flow derivatives:

Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017

Accumulated OCI beginning balance $ 1,973 $ — $ 965 $ — Reclassified from accumulated OCI to income: Due to reclassification of previously deferred gain (336) — (336) — Change in fair value of cash flow hedge accounting contracts, net of tax 866 197 1,874 197 Accumulated OCI ending balance, net of tax benefit of $34 and $0, respectively $ 2,503 $ 197 $ 2,503 $ 197 Gains expected to be reclassified from accumulated OCI during the next 12 months $ 531 $ — $ 531 $ —

16 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Note 6. Common Stock As of September 30, 2018 and December 31, 2017, the Company had 596,950 shares of common stock authorized and had 8,386 shares available for grants under our share-based compensation programs as of September 30, 2018. For a detailed description of our share-based compensation programs refer to Note 10, Employee Stock Benefit Plans in our Annual Report on Form 10-K for the year ended December 31, 2017.

Common Stock Repurchases On December 9, 2014, Vonage's Board of Directors authorized a program for the Company to repurchase up to $100.0 million of its outstanding common stock (the "2014 $100.0 million repurchase program"). Repurchases under the 2014 $100.0 million repurchase program are expected to be made over a four-year period ending on December 31, 2018.

We repurchased the following shares of common stock with cash resources under the 2014 $100.0 million repurchase program during the nine months ended September 30, 2018 and 2017:

Nine Months Ended September 30, 2018 2017 Shares of common stock repurchased — 1,599 Value of common stock repurchased $ — $ 9,510 There were no repurchases for the three and nine months ended September 30, 2018 and the three months ended September 30, 2017. As of September 30, 2018, $42,533 remained of our 2014 $100.0 million repurchase program. The repurchase program expires on December 31, 2018 but may be suspended or discontinued at any time without notice.

In any period under the 2014 $100.0 million repurchase program, cash used in financing activities related to common stock repurchases may differ from the comparable change in stockholders' equity, reflecting timing differences between the recognition of share repurchase transactions and their settlement for cash.

Note 7. Commitments and Contingencies From time to time, in addition to those identified below, we are subject to legal proceedings, claims, investigations, and proceedings in the ordinary course of business, including claims of alleged infringement of third-party patents and other intellectual property rights, commercial, employment, and other matters. From time to time, we receive letters or other communications from third parties inviting us to obtain patent licenses that might be relevant to our business or alleging that our services infringe upon third party patents or other intellectual property. In accordance with generally accepted accounting principles, we make a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable. We believe that we have valid defenses with respect to the legal matters pending against us and are vigorously defending these matters. Given the uncertainty surrounding litigation and our inability to assess the likelihood of a favorable or unfavorable outcome in the matters noted below and our inability to reasonably estimate the amount of loss or range of loss, it is possible that the resolution of one or more of these matters could have a material adverse effect on our condensed consolidated financial position, cash flows or results of operations.

17 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Litigation IP Matters RPost Holdings, Inc. On August 24, 2012, RPost Holdings, Inc., RPost Communications Limited, and RMail Limited (collectively, “RPost”) filed a lawsuit against StrongMail Systems, Inc. (“StrongMail”) in the United States District Court for the Eastern District of Texas alleging that StrongMail’s products and services, including its electronic mail marketing services, are covered by United States Patent Nos. 8,224,913, 8,209,389, 8,161,104, 7,966,372, and 6,182,219. On February 11, 2013, RPost filed an amended complaint, adding 27 new defendants, including Vonage America Inc. RPost’s amended complaint alleges willful infringement of the RPost patents by Vonage and each of the other new defendants because they are customers of StrongMail. StrongMail has agreed to fully defend and indemnify Vonage in this lawsuit. Vonage answered the complaint on May 7, 2013. On September 17, 2015, the Court ordered the consolidation for pre-trial purposes of this case with other cases by RPost. The lead case has been administratively closed and stayed since January 30, 2014 due to multiple pending actions by third parties regarding ownership of the patents at issue. In a parallel Arizona district court litigation involving RPost, certain of the asserted patent claims were invalidated on June 7, 2016, which decision was affirmed by the Federal Circuit, with the Supreme Court denying certiorari on December 11, 2017. On September 5, 2018, the parties in the consolidated actions filed a joint notice regarding status of the co- pending actions. Plaintiffs requested that the stay be lifted, while defendants maintain that the stay should remain in place. Commercial Litigation Merkin & Smith, et al. On September 27, 2013, Arthur Merkin and James Smith filed a putative class action lawsuit against Vonage America, Inc. in the Superior Court of the State of California, County of Los Angeles, alleging that Vonage violated California’s Unfair Competition Law by charging its customers fictitious 911 taxes and fees. On October 30, 2013, Vonage filed a notice removing the case to the United States District Court for the Central District of California. On November 26, 2013, Vonage filed its Answer to the Complaint. On December 4, 2013, Vonage filed a Motion to Compel Arbitration, which the Court denied on February 4, 2014. On March 5, 2014, Vonage appealed that decision to the United States Court of Appeals for the Ninth Circuit. On March 26, 2014, the district court proceedings were stayed pending the appeal. On February 29, 2016, the Ninth Circuit reversed the district court’s ruling and remanded with instructions to grant the motion to compel arbitration. On March 22, 2016, Merkin and Smith filed a petition for rehearing. On May 4, 2016, the Ninth Circuit withdrew its February 29, 2016 decision and issued a new order reversing the district court’s order and remanded with instructions to compel arbitration. The Ninth Circuit also declared as moot the petition for rehearing. On June 27, 2016, the lower court stayed the case pending arbitration. A joint status report was filed with the District Court on December 23, 2016. A second joint status report was filed with the District Court on March 23, 2017. A third joint status report was filed with the District Court on June 27, 2017. A fourth joint status report was filed with the District Court on September 26, 2017. A fifth joint status report was filed with the District Court on December 26, 2017. Counsel for Vonage spoke with counsel for plaintiffs in mid-February 2018, seeking voluntary dismissal. Plaintiff's counsel advised they intended to seek public injunctive relief. The parties are reviewing their respective positions. The parties continue to file quarterly joint status reports pending plaintiffs decision on next steps. Regulation Telephony services are subject to a broad spectrum of state, federal and foreign regulations. Because of the uncertainty over whether Voice over Internet Protocol (“VoIP”) should be treated as a telecommunications or information service, we have been involved in a substantial amount of state and federal regulatory activity. Implementation and interpretation of the existing laws and regulations is ongoing and is subject to litigation by various federal and state agencies and courts. Due to the uncertainty over the regulatory classification of VoIP service, there can be no assurance that we will not be subject to new regulations or existing regulations under new interpretations, and that such change would not introduce material additional costs to our business.

18 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Federal - Net Neutrality Clear and enforceable net neutrality rules make it more difficult for broadband Internet service providers to block or discriminate against Vonage service. In addition, explicitly applying net neutrality rules to wireless broadband Internet service providers could create greater opportunities for VoIP applications that run on wireless broadband Internet service. In December 2010, the Federal Communications Commission, or FCC, adopted net neutrality rules that applied strong net neutrality rules to wired broadband Internet service providers and limited rules to wireless broadband Internet service providers. On January 14, 2014, the D.C. Circuit Court of Appeals vacated a significant portion of the 2010 rules. On May 15, 2014, the FCC issued a Notice of Proposed Rulemaking, or NPRM, proposing new net neutrality rules. After public response to the NPRM, the FCC adopted new neutrality rules on February 26, 2015. These rules prohibit broadband Internet service providers from: (1) blocking or throttling lawful content applications, or services; (2) imposing paid prioritization arrangements; and (3) unreasonably interfering or unreasonably disadvantaging consumers or edge providers. In addition, broadband Internet service providers are required to make certain disclosures regarding their network management practices, network performance, and commercial terms. These net neutrality rules apply the same requirements to wired and wireless broadband Internet service providers. In December 2017, the FCC issued a decision reversing its prior position on net neutrality. The decision allows for paid prioritization. Numerous public interest groups and some companies are currently or expected to challenge the order in court. It is also anticipated that Congress may introduce legislation to overrule the FCC's decision and reinstate net neutrality. Nonetheless, on June 4, 2018, the old Net Neutrality rules were repealed. Various states are enacting their own laws to require net neutrality within their state. Federal - Rural Call Completion Issues On February 7, 2013, the FCC released a NPRM on rural call completion issues. The NPRM proposed new detailed reporting requirements to gauge rural call completion performance. Rural carriers have argued that VoIP provider call completion performance to rural areas is generally poor. On October 28, 2013, the FCC adopted an order on rural call completion imposing new reporting obligations and restricting certain call signaling practices. The call signaling rules went into effect on January 31, 2014. We filed for extensions of the rules, which the FCC granted, and as of April 17, 2014, we were compliant with the FCC call signaling rules. The effective date for the reporting requirements was April 1, 2015. We could be subject to an FCC enforcement action in the future in the event the FCC took the position that our rural call completion performance is inadequate or we were not compliant with the FCC’s order. On June 22, 2017, the FCC issued a Second Further Notice of Proposed Rulemaking. The FCC has proposed changes to the FCC's rules that allegedly would more effectively address rural call completion problems while reducing burdens on covered providers. Vonage reviewed and evaluated the FCC's proposed changes and provided input to The Voice on the Net, or VON, Coalition, an organization that works to advance regulatory policies for IP-enabled communications. Comments to the Rural Call Completion Second Report and Order and Third Further Notice of Proposed Rulemaking were adopted by the FCC on April 17, 2018. Comments were due on June 4, 2018 and replies were due on June 19, 2018. On April 24, the FCC Wireline Competition Bureau granted a waiver of the rural call completion reporting requirements, including a temporary waiver with respect to the report on May 1, 2018. On August 15, 2018 the FCC established a registry for intermediate providers to register before offering to transmit voice calls. The intermediate providers have to register within 30 days from publication in the Federal Register. Vonage can use contractual restrictions to flow down requirements for the call paths. On August 1, 2018, the NTCA filed a petition for reconsideration, which the VON Coalition opposed. Federal - NPRM - Number Slamming On July 13, 2017, the FCC adopted a NPRM regarding ways to protect consumers from number "slamming" and "cramming" without impeding competition or impairing the ability of consumers to switch providers. Vonage is monitoring this NPRM. On June 7, 2018, the FCC adopted new consumer protections against slamming and cramming. The amended rules reinforce the FCC's ability to take action against slammers and crammers and to deter carriers from slamming and cramming. Specifically, the FCC codified a ban on material misrepresentations on sales calls and unauthorized charges on telephone bills, and improved the effectiveness of the existing third-party verification process. At the same time, the FCC declined to adopt additional measures that may unduly hinder consumers' ability to switch providers.

19 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Federal - NPRM Toll Free Assignment Modernization On September 26, 2017, the FCC issued a NPRM regarding the modernization of toll free number assignment. The FCC proposes amending its rules to allow for the use of an auction to assign certain toll free numbers - such as vanity and repeater numbers - in order to better promote the equitable and efficient use of numbers (especially as afforded by the opening of the 833 toll free code). The FCC issued a Report and Order on September 27, 2018 providing for (a) a public auction for rights to use numbers in the new 833 toll free code, (b) an experiment on using competitive bidding to most effectively determine how to effectively assign toll free numbers, (c) assigning SOMOS as the Administrator/Auctioneer for the 833 code, (d) finding use of competitive bidding orderly and efficient (as opposed to prior FIFO approach), (e) eliminating requirement that only responsible organizations can participate, and (f) use of a Vickery single round auction, whereby the winner only has to pay the second highest bid. Vonage continues to monitor activity with respect to this NPRM. Federal - NOI - Enterprise Communications Systems Access to 911/Kari’s Law/Ray Baum’s Law On September 26, 2017, the FCC adopted a Notice of Inquiry, or NOI, with respect to 911 access, routing and location in Enterprise Communication Systems. Vonage continues to monitor activity related to this NOI. On September 26, 2018 the FCC issued a Notice of Proposed Rulemaking to address issues around 911 Emergency Calling. Kari’s Law will require multi-line telephone systems to allow users to dial 911 directly without a “9” or other prefix, and configure multi-line telephone systems to provide a notification that (a) a 911 call has been placed, (b) a valid call back number has been provided, and (c) identifies the callers’ location. Ray Baum’s law requires the FCC to consider adopting rules that require a dispatchable location. The NPRM requests interested parties to comment on the technical feasibility and other issues related to these two laws. Federal - Access to Telecommunication Equipment and Services by Persons with Disabilities At its open meeting on for October 24, 2017, the FCC applied its wireline hearing aid compatibility rules/standards to handsets that provide advanced communication services, which includes interconnected and non-interconnected VoIP. The rules include certain coupling and volume control requirements that would allow the handsets to work better for persons with hearing aids. There are also testing and certification requirements, which typically apply to the handset manufacturer. The FCC also adopted a requirement for volume control in wireless handsets. The new rules have a two-year phase in for new phones and do not require the modification to existing handsets. On April 5, 2018 the FCC’s Consumer and Governmental Affairs Bureau issued a public notice seeking comment on the accessibility of communications technologies for the 2018 Biennial Report required by the Twenty First Century Communications and Video Accessibility Act. The report must be filed with Congress on or before October 8, 2018. The Bureau sought comments by April 26, 2018. On August 5. 2018, the FCC invited comments (a) on level of accessibility and usability of covered products and services, (b) barriers to accessibility, and (c) impact of record keeping requirements and enforcement measures have had on development and deployment of new technologies. On August 9, 2018, the FCC issued a notice seeking public comments, which were due August 23, 2018. Vonage will continue to monitor activity. Federal - Rules and Policies Regarding Caller ID Services At its open meeting on October 24, 2017, the FCC issued a report and order regarding amendments to the FCC's rules to exempt threatening calls from current Caller ID blocking roles so that, among other changes, law enforcement and security personnel have timely access to information they need to aid their investigations. The order exempts threatening calls from the CPN privacy rules. Federal - Number Portability NPRM and NOI At its open meeting on October 24, 2017, the FCC released a NPRM that would allow carriers flexibility in conducting number portability database queries to promote nationwide number portability and eliminate the dialing party requirement as it applies to interexchange service. The NOI seeks comments on industry number portability models and how number administration might be improved for more efficient technical, operational, administrative and legal processes. In early July 2018 the FCC adopted a report and order that made technical rule changes to lay the groundwork for nationwide number portability. The Report and Order expands existing forbearance from dialing parity requirements beyond incumbent LECS such that the forbearance is widely applicable. It further revises the N-1 call routing requirements by allowing upstream carriers to query the number portability database rather than only permitting the N-1, or second to last carrier, to do so. This may positively impact Vonage when it goes into effect in September 2019, as it essentially changes N-1 rule to be a default in the absence of other agreements. Vonage is working with the VON Coalition and is monitoring this NPRM and NOI.

20 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Federal - Second Further Notice of Proposed Rulemaking - Unwanted calls to reassigned telephone numbers On March 23, 2018, the FCC issued its Second NPRM seeking comments on ways to address unwanted calls to reassigned telephone numbers. The FCC is seeking comment on, among other issues, (1) the specific information that callers need from a reassigned numbers database, and (2) the best way to make that information available to callers that want it. The rules are intended to benefit consumers by reducing unwanted calls intended for another consumer while helping callers avoid the costs of calling the wrong consumer, including potential violations of the TCPA. Vonage will continue to monitor this rulemaking through the VON Coalition. State Telecommunications Regulation In general, the focus of interconnected VoIP telecommunications regulation is at the federal level. On November 12, 2004, the FCC issued a declaratory ruling providing that our service is subject to federal regulation and preempted the Minnesota Public Utilities Commission, or MPUC, from imposing certain of its regulations on us. The FCC's decision was based on its conclusion that our service is interstate in nature and cannot be separated into interstate and intrastate components. On March 21, 2007, the United States Court of Appeals for the 8th Circuit affirmed the FCC's declaratory ruling preempting state regulation of our service. While this ruling does not exempt us from all state oversight of our service, it effectively prevents state telecommunications regulators from imposing certain burdensome and inconsistent market entry requirements and certain other state utility rules and regulations on our service. State regulators continue to probe the limits of federal preemption in their attempts to apply state telecommunications regulation to interconnected VoIP service. On July 16, 2009, the Nebraska Public Service Commission and the Kansas Corporation Commission filed a petition with the FCC seeking a declaratory ruling or, alternatively, adoption of a rule declaring that state authorities may apply universal service funding requirements to nomadic VoIP providers. We participated in the FCC proceedings on the petition. On November 5, 2010, the FCC issued a declaratory ruling that allowed states to assess state USF on nomadic VoIP providers on a going forward basis provided that the states comply with certain conditions to ensure that imposing state USF does not conflict with federal law or policy. On July 28, 2015, the MPUC found that it has authority to regulate Charter’s fixed, interconnected VoIP service. Charter challenged the MPUC’s order at the U.S. District Court for Minnesota. This challenge is currently pending. In September 2017 amicus briefs were filed in support of the Minnesota PUC's appeal of the Charter decision by AARP, the AARP Foundation, Professor Barbara Cherry, the National Association of Regulatory Utility Commissioners and the national Association of State Consumer Advocates and the Mid-Minnesota Legal Aid. In September 2018, an appeal was filed from the US District Court- Minneapolis’ decision that VoIP is an “Information Service “ under the Telecommunications Act and that therefore state regulation of Charter’s VoIP services was preempted by federal law. NARUC and others have argued that the decision (a) undermines the Federal USF subsidy program which can be accessed only by providers of “telecom services”, which a 2014 10th circuit decision equates with interconnected VoIP service, (b) classified “information services” in a way that directly undermines the local telephone competition that was the central thrust of the 1996 Telecommunication Act by treating carriers competing to provide local telephone service differently, and (c) the information services classification is illogical and inconsistent with the plain text of the statute. Vonage will continue to monitor this action. On August 14, 2017, the Arizona Corporation Commission issued an opinion and order with respect to amendments to the Arizona Universal Services Fund. The rulemaking allows for, among other things, the collection of additional USF surcharges in Arizona to fund the E-rate Broadband Special Construction Project Matching Fund Program. The Arizona Corporation Commission held hearings on September 12 and 13, 2017. Vonage will continue to monitor this rulemaking to determine its effect upon its business activities within Arizona. We expect that state public utility commissions and state legislators will continue their attempts to apply state telecommunications regulations to nomadic VoIP service.

21 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

State and Municipal Taxes In accordance with generally accepted accounting principles, we make a provision for a liability for taxes when it is both probable that a liability has been incurred and the amount of the liability or range of liability can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. For a period of time, we did not collect or remit state or municipal taxes (such as sales, excise, utility, use, and ad valorem taxes), fees or surcharges (“Taxes”) on the charges to our customers for our services, except that we historically complied with the New Jersey sales tax. We have received inquiries or demands from a number of state and municipal taxing and 911 agencies seeking payment of Taxes that are applied to or collected from customers of providers of traditional public switched telephone network services. Although we have consistently maintained that these Taxes do not apply to our service for a variety of reasons depending on the statute or rule that establishes such obligations, we are now collecting and remitting sales taxes in certain of those states including a number of states that have changed their statutes to expressly include VoIP. In addition, many states address how VoIP providers should contribute to support public safety agencies, and in those states we remit fees to the appropriate state agencies. We could also be contacted by state or municipal taxing and 911 agencies regarding Taxes that do explicitly apply to VoIP and these agencies could seek retroactive payment of Taxes. As such, we have established reserves of $1,868 and $1,147 as of September 30, 2018 and December 31, 2017, respectively, as our best estimate of the potential tax exposure for any retroactive assessment. UK OFCOM Investigation On April 3, 2018, the UK Office of Communications ("OFCOM") launched an investigation to determine Vonage Limited’s compliance with General Condition 3.1 and Section 105A of the Communications Act 2003, which cover obligations of communication providers to take necessary measures to, among other things, maintain network availability and access to emergency services. In cases where violations are found, OFCOM has the authority to issue monetary penalties in accordance with its Guidelines and limitations imposed by statute. In April 2018, Vonage submitted its responses to OFCOM’s first request for information, and in May 2018, Vonage submitted its responses to OFCOM’s second request for information. On October 18, 2018, representatives from Vonage met with OFCOM for the purpose of receiving an update from the OFCOM case team on the status of the case. Vonage was informed that the fact-gathering phase was coming to a close, and that a final information request would be forthcoming. Subsequently, on October 19, 2018, that request was received from OFCOM, and Vonage submitted its response shortly thereafter. OFCOM is reviewing the submitted information.

Note 8. Acquisitions and Dispositions

Acquisition of TokBox On August 1, 2018, the Company announced that it had acquired 100% of the issued and outstanding shares of Telefonica Digital, Inc. (“TDI”), a subsidiary of Telefonica, S.A., and TDI’s subsidiaries, TokBox, Inc. (“TokBox”) and TokBox Australia Pty Limited, for a purchase price of $32,906 paid in cash. San Francisco-based TokBox develops and operates the OpenTok Platform and is the industry leader in the WebRTC programmable video segment of the cloud communications market which will compliment the Company's existing portfolio of programmable communications.

22 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

The acquisition was recorded as a business combination under ASC 805, with identifiable assets acquired and liabilities assumed provisionally recorded at their estimated fair value on the acquisition date. The initial accounting for the business combination is not complete because the evaluation necessary to assess the fair value of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified up to one year from the date of the acquisition as more information is obtained about the fair value of assets acquired and liabilities assumed. The purchase price of $32,906 was provisionally allocated as follows:

August 1, 2018 Assets Cash and cash equivalents $ 557 Current assets 2,205 Property, plant and equipment 124 Goodwill 20,499 Intangible assets 15,602 Restricted cash 50 Total assets acquired 39,037

Liabilities Accounts payable 371 Accrued expenses 5,760 Total liabilities assumed 6,131 Net assets acquired $ 32,906 The Company recorded goodwill of $20,499 which is attributable to the Business segment and is deductible for tax purposes. The factors that resulted in goodwill arising from the acquisition include the revenues expected to be achieved by incorporating a video feature in the Company's API platform along with a skilled workforce proficient in API development. The Company also recorded intangible assets of $15,602 comprised of customer relationships of $5,020 and developed technology of $10,582 with weighted average remaining amortization period of 7 years and 5 years, respectively. In addition, the Company incurred and expensed acquisition related transaction costs included in general and administrative expense related to the acquisition of TokBox of $4,672 and $4,954 for the three and nine months ended September 30, 2018.

Supplemental Pro Forma Information

Since the acquisition date, TokBox contributed $1,626 in revenue and $3,620 in net losses. The following supplemental pro forma information represents the results of operations as if Vonage had acquired TokBox on January 1, 2017.

Nine Months Ended September 30, 2018 2017 Revenue $ 780,846 $ 758,245 Net income 27,601 5,524 Net income per share - basic $ 0.12 $ 0.02 Net income per share - diluted $ 0.11 $ 0.02

23 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

The pro forma information has been adjusted to include the pro-forma impact of amortization of intangible assets based on the preliminary purchase price allocations. The pro forma data has also been adjusted to eliminate non-recurring transaction costs as well as the related tax impact of pro forma adjustments. There were no transactions between Vonage and TokBox. The pro forma results are presented for illustrative purposes only and do not reflect the realization of potential cost savings or any related integration costs.

Goodwill

The following table provides a summary of the changes in the carrying amounts of goodwill which is attributable to our business segment:

Balance at December 31, 2017 $ 373,764 Increase in goodwill related to acquisition of TokBox 20,499 Foreign currency translation adjustment (4,773) Balance at September 30, 2018 $ 389,490

Sale of Hosted Infrastructure Product Line

On May 31, 2017, we completed the sale of our Hosted Infrastructure product line for up to $4.0 million consideration comprised of $1.0 million received upon closing, an additional $0.5 million of contingent consideration received during the third quarter of 2017 and the potential for up to $2.5 million further consideration based on the achievement of financial objectives for net sales during the 18 months following closing. The results of our Hosted Infrastructure product line have historically been included within the Business segment. As a result of the sale, we recorded a gain $1,377 for the nine months ended September 30, 2017, within other income. This disposal did not represent a strategic shift in operations and, therefore, did not qualify for presentation as discontinued operations.

24 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Note 9. Industry Segment and Geographic Information ASC 280 "Segment Reporting" establishes reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major customers. Under ASC 280, the method for determining what information to report is based upon the way management organizes the operating segments within the Company for making operating decisions and assessing financial performance. Our chief operating decision-maker reviews revenue and gross margin information for each of our reportable segments, but does not review operating expenses on a segment by segment basis. In addition, with the exception of goodwill and intangible assets, we do not identify or allocate our assets by the reportable segments.

Business

For our Business customers, we provide innovative, cloud-based UCaaS solutions, comprised of integrated voice, text, video, data, collaboration, and mobile applications over our flexible, scalable SIP based VoIP network. Through Nexmo, the Vonage API Platform, we also offer CPaaS solutions designed to enhance the way businesses communicate with their customers embedding communications into apps, websites and business processes. Together we have a robust set of product families tailored to serve the full range of the business value chain, from the SMB, market, through mid-market and enterprise markets. We provide customers with multiple deployment options, designed to provide the reliability and quality of service they demand. We provide customers the ability to integrate our cloud communications platform with many cloud-based productivity and CRM solutions, including Google’s G Suite, Zendesk, Salesforce’s Sales Cloud, Oracle, Clio, and other CRM solutions. In combination, our products and services permit our business customers to communicate with their customers and employees through any cloud-connected device, in any place, at any time without the often costly investment required with on-site equipment.

Consumer

For our Consumer customers, we enable users to access and utilize our UCaaS services and features, via a single “identity,” either a number or user name, regardless of how they are connected to the Internet, including over 3G/4G, LTE, Cable, or DSL broadband networks. This technology enables us to offer our Consumer customers attractively priced voice and messaging services and other features around the world on a variety of devices.

For our segments we categorize revenues as follows:

Services revenues. Services revenues consists primarily of revenue attributable to our communication services for Consumer and Software Defined Wide Area Network, or SD-WAN, UCaaS and CPaaS services for Business,

Access and product revenues. Product revenues include equipment sold to customers, shipping and handling, professional services, and broadband access. Beginning January 1, 2018, we also included revenues associated with providing access services to Business customers. We have adjusted the three and nine months ended September 30, 2017 to include these revenues in access and product revenues which were previously included in service revenues.

USF revenues. USF revenues represent fees passed on to customers to offset required contributions to the USF.

For our segments we categorize cost of revenues as follows:

Services cost of revenues. Services cost of revenues consists of costs associated with network operations and technical support personnel, communication origination, and termination services provided by third party carriers and excludes depreciation and amortization.

Access and product cost of revenues. Product cost of revenues includes equipment sold to customers, shipping and handling, professional services, cost of certain products including equipment or services that we give customers as promotions, and broadband access. As noted above, beginning January 1, 2018, we also included costs associated with providing access services to Business customers. We have adjusted the three and nine months ended September 30, 2017 to include these costs in access and product revenues which were previously included in service cost of revenues.

USF cost of revenues. USF cost of revenues represents contributions to the Federal USF and related fees.

25 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Information about our segment results for the three and nine months ended September 30, 2018 were as follows:

Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 Business Consumer Total Business Consumer Total Revenues Service revenues $ 133,709 $ 97,093 $ 230,802 $ 377,703 $ 301,954 $ 679,657 Access and product revenues (1) 12,427 92 12,519 37,674 472 38,146 Service, access and product revenues 146,136 97,185 243,321 415,377 302,426 717,803 USF revenues 7,499 10,711 18,210 22,768 34,408 57,176 Total revenues 153,635 107,896 261,531 438,145 336,834 774,979

Cost of revenues Service cost of revenues (2) 59,600 10,661 70,261 172,917 37,050 209,967 Access and product cost of revenues (1) 14,887 993 15,880 43,291 4,657 47,948 Service, access and product cost of revenues 74,487 11,654 86,141 216,208 41,707 257,915 USF cost of revenues 7,499 10,711 18,210 22,773 34,434 57,207 Total cost of revenues 81,986 22,365 104,351 238,981 76,141 315,122

Segment gross margin Service margin 74,109 86,432 160,541 204,786 264,904 469,690 Access and product margin (2,460) (901) (3,361) (5,617) (4,185) (9,802) Gross margin ex-USF (Service, access and product margin) 71,649 85,531 157,180 199,169 260,719 459,888 USF margin — — — (5) (26) (31) Segment gross margin $ 71,649 $ 85,531 $ 157,180 $ 199,164 $ 260,693 $ 459,857

Segment gross margin % Service margin % 55.4% 89.0% 69.6% 54.2% 87.7% 69.1% Gross margin ex-USF (Service, access and product margin %) 49.0% 88.0% 64.6% 47.9% 86.2% 64.1% Segment gross margin % 46.6% 79.3% 60.1% 45.5% 77.4% 59.3% (1) Includes customer premise equipment, access, and shipping and handling. (2) Excludes depreciation and amortization of $5,141 and $1,245 for the three months ended September 30, 2018 and $15,092 and $3,954 for the nine months ended September 30, 2018, respectively.

26 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Information about our segment results for the three and nine months ended September 30, 2017 were as follows:

Three Months Ended Nine Months Ended September 30, 2017 September 30, 2017 Business Consumer Total Business Consumer Total Revenues Service revenues $ 108,819 $ 111,913 $ 220,732 $ 303,814 $ 346,666 $ 650,480 Access and product revenues (1) 13,749 94 13,843 41,622 498 42,120 Service, access and product revenues 122,568 112,007 234,575 345,436 347,164 692,600 USF revenues 6,738 11,770 18,508 19,386 36,280 55,666 Total revenues 129,306 123,777 253,083 364,822 383,444 748,266

Cost of revenues Service cost of revenues (2) 49,078 19,434 68,512 134,041 62,969 197,010 Access and product cost of revenues (1) 14,401 1,517 15,918 43,537 5,475 49,012 Service, access and product cost of revenues 63,479 20,951 84,430 177,578 68,444 246,022 USF cost of revenues 6,738 11,770 18,508 19,386 36,280 55,666 Total cost of revenues 70,217 32,721 102,938 196,964 104,724 301,688

Segment gross margin Service margin 59,741 92,479 152,220 169,773 283,697 453,470 Access and product margin (652) (1,423) (2,075) (1,915) (4,977) (6,892) Gross margin ex-USF (Service, access and product margin) 59,089 91,056 150,145 167,858 278,720 446,578 USF margin — — — — — — Segment gross margin $ 59,089 $ 91,056 $ 150,145 $ 167,858 $ 278,720 $ 446,578

Segment gross margin % Service margin % 54.9% 82.6% 69.0% 55.9% 81.8% 69.7% Gross margin ex-USF (Service, access and product margin %) 48.2% 81.3% 64.0% 48.6% 80.3% 64.5% Segment gross margin % 45.7% 73.6% 59.3% 46.0% 72.7% 59.7% (1) Includes customer premise equipment, access, and shipping and handling. (2) Excludes depreciation and amortization of $5,053 and $1,799 for the three months ended September 30, 2017 and $14,931 and $5,566 for the nine months ended September 30, 2017, respectively.

27 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

A reconciliation of the total of the reportable segments' gross margin to consolidated income before income taxes is as follows:

Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017 Total reportable gross margin $ 157,180 $ 150,145 $ 459,857 $ 446,578 Sales and marketing 74,380 73,576 229,201 235,245 Engineering and development 14,309 6,956 35,504 21,996 General and administrative 37,620 26,811 97,376 98,411 Depreciation and amortization 16,024 18,179 51,886 54,520 Income from operations 14,847 24,623 45,890 36,406

Interest expense (3,036) (3,821) (9,294) (11,385) Other income (expense), net 347 468 431 943 Income before income taxes $ 12,158 $ 21,270 $ 37,027 $ 25,964

Information about our operations by geographic location is as follows:

Three Months Ended Nine Months Ended September 30, September 30, 2018 2017 2018 2017

Revenues: United States $ 206,507 $ 212,346 $ 620,618 $ 639,852 Canada 6,700 6,877 20,568 23,324 United Kingdom 9,559 7,175 29,818 19,446 Other Countries (1) 38,765 26,685 103,975 65,644 $ 261,531 $ 253,083 $ 774,979 $ 748,266

(1) No individual other international country represented greater than 10% of total revenue during the periods presented.

September 30, 2018 December 31, 2017 Long-lived assets: United States $ 607,618 $ 615,432 United Kingdom 265 365 Israel 1,128 243 $ 609,011 $ 616,040

28 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Note 10. Income Taxes

The income tax (expense) benefit consisted of the following:

Three Months Ended Nine Months Ended September 30, September 30,

2018 2017 2018 2017 Income before income taxes $ 12,158 $ 21,270 $ 37,027 $ 25,964 Income tax (expense) benefit (2,570) (10,668) 5,644 (4,624) Effective tax rate 21.1% 50.2% (15.2)% 17.8% We recognize income tax equal to pre-tax income multiplied by our annual effective income tax rate. In addition, adjustments are recorded for discrete period items and changes to our state effective tax rate which can cause the rate to fluctuate from quarter to quarter. For the three and nine months ended September 30, 2018, our effective tax rate was different than the statutory rate due to a forecasted permanent adjustment of $5,312 as a result of the officer compensation limitation under IRC §162(m) and $5,597 for both periods related to the new Global Intangible Low-Taxed Income ("GILTI") tax rules that were enacted as part of tax reform in December 2017. In addition, the Company recorded a discrete period tax benefit of $1,912 and $19,228, respectively, which were recognized related to excess tax benefits on equity compensation for the three and nine months ended September 30, 2018. For the three and nine months ended September 30, 2017, our effective tax rate was different than the statutory rate due to a discrete period tax benefits of $9,539 and $1,433, respectively which were recognized related to excess tax benefits on equity compensation recognized primarily in the first quarter of 2017 as well as an adjustment to our deferred asset related to stock compensation.

On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act ("TCJA") which reformed tax policy in the United States with the primary impact resulting in reducing the corporate tax rate from 35% to 21% beginning January 1, 2018. This resulted in an expense of $69,378 recognized by the Company during the year ended December 31, 2017 attributable to the re-measurement of the Company's deferred tax assets as of December 31, 2017. Due to the timing of the enactment and the complexity involved in applying the provisions of the TCJA, the Company has made reasonable estimates of the effects and recorded provisional amounts in our financial statements as of December 31, 2017.

During the nine months ended September 30, 2018, we reviewed further information and interpreted the TCJA utilizing additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and other regulatory bodies. We have made no adjustments to the provisional amounts recorded related to the re-measurement of the deferred tax asset as well as the conclusion regarding the applicability of repatriation tax. The Company will continue to analyze the effects of the TCJA on the Company’s operations and will record any adjustments associated with the enactment of the legislature during the measurement period as provided by SAB 118.

Uncertain Tax Positions

The Company had an uncertain tax position of $1,086 as of December 31, 2017. As a result of acceptance by the Internal Revenue Service of requested accounting method change relating to the reporting of tenant incentive allowance income, this uncertain tax position has been removed. As of September 30, 2018, the Company has recorded an uncertain tax position in the amount of $272 due to the uncertainty regarding the rate used by TokBox when calculating its transfer pricing costs to its affiliated entities. The Company recognizes interest and penalties related to uncertain tax positions in income taxes. The Company did not have any interest or penalties related to this uncertain tax position during the three and nine months ended September 30, 2018 and September 30, 2017.

Net Operating Loss Carry Forwards ("NOLs")

As of September 30, 2018, we had cumulative domestic Federal NOLs of $565,730 and cumulative state NOLs of approximately $146,254, expiring at various times through 2037. In addition, we had NOLs for United Kingdom tax purposes of $50,142 with no expiration date.

29 VONAGE HOLDINGS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) (Unaudited)

Note 11. Subsequent Events

On October 31, 2018, the Company acquired 100% of the issued and outstanding shares of NewVoiceMedia Limited (“NewVoiceMedia”), a cloud Contact Center-as-a-Service (CCaaS) provider, for a purchase price of $350 million paid in cash. NewVoiceMedia is a private limited company organized under the laws of England & Wales. Due to the closing of the acquisition subsequent to the period end, the Company is currently in the process of determining the fair value of assets acquired and liabilities assumed necessary to develop the purchase price allocation. As such, disclosure of the purchase price allocation and supplemental pro forma information is not practicable. As of September 30, 2018, the Company has incurred and expensed acquisition related transaction costs included in general and administrative expense related to the acquisition of NewVoiceMedia of approximately $4,832.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion together with our condensed consolidated financial statements and the related notes included elsewhere in this Form 10-Q and our audited financial statements included in our Annual Report on Form 10-K. This discussion contains forward-looking statements. These forward-looking statements are based on information available at the time the statements are made and/or management’s belief as of that time with respect to future events and involve risks and uncertainties that could cause actual results and outcomes to be materially different. Important factors that could cause such differences include but are not limited to: the competition we face; the expansion of competition in the cloud communications market; our ability to adapt to rapid changes in the cloud communications market; the nascent state of the cloud communications for business market; our ability to retain customers and attract new customers cost effectively; the risk associated with developing and maintaining effective internal sales teams and effective distribution channels; risks related to the acquisition or integration of businesses we have acquired; security breaches and other compromises of information security; risks associated with sales of our services to medium-sized and enterprise customers; our reliance on third party hardware and software; our dependence on third party facilities, equipment, systems and services; system disruptions or flaws in our technology and systems; our ability to scale our business and grow efficiently; our dependence on third party vendors; the impact of fluctuations in economic conditions, particularly on our small and medium business customers; our ability to comply with data privacy and related regulatory matters; our ability to obtain or maintain relevant intellectual property licenses; failure to protect our trademarks and internally developed software; fraudulent use of our name or services; intellectual property and other litigation that have been and may be brought against us; reliance on third parties for our 911 services; uncertainties relating to regulation of business services; risks associated with legislative, regulatory or judicial actions regarding our business products; risks associated with operating abroad; risks associated with the taxation of our business; risks associated with a material weakness in our internal controls; governmental regulation and taxes in our international operations; liability under anti-corruption laws or from governmental export controls or economic sanctions; our dependence on our customers' broadband connections; restrictions in our debt agreements that may limit our operating flexibility; foreign currency exchange risk; our ability to obtain additional financing if required; any reinstatement of holdbacks by our credit card processors; our history of net losses and ability to achieve consistent profitability in the future; our ability to fully realize the benefits of our net operating loss carry-forwards if an ownership change occurs; certain provisions of our charter documents/ and other factors that are set forth in the “Risk Factors” in our Annual Report on Form 10-K and in our Quarterly Reports on Form 10-Q. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, and therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to the date this Form 10-Q is filed with the Securities and Exchange Commission.

Financial Information Presentation For the financial information discussed in this Quarterly Report on Form 10-Q, other than per share and per line amounts, dollar amounts are presented in thousands, except where noted. All trademarks are the property of their owners. Overview and Strategy At Vonage, we are redefining business communications. True to our roots as a technology disruptor, we are embracing technology to transform how businesses communicate to create better business outcomes. Our cloud communications platform enables businesses of all sizes to collaborate more productively and engage their customers more efficiently across any device. Vonage customers can choose among two separate delivery models to suit their specific communication needs: They can purchase Vonage Business with a Software as a Service, or SaaS, model for a complete and configured unified communications solution or they can purchase Nexmo's "the Vonage API Platform" with a Platform as a Service, or PaaS, model and consume our cloud communication in programmable modules, delivered via application programming interfaces, or APIs. We also provide a robust suite of feature-rich residential communication solutions.

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Business

For our Business customers, we provide innovative, cloud-based Unified Communications as a Service, or UCaaS, solutions, comprised of integrated voice, text, video, data, collaboration, and mobile applications over our flexible, scalable Session Initiation Protocol based Voice over Internet Protocol, or VoIP, network. We also offer Communications Platform as a Service, or CPaaS, solutions designed to enhance the way businesses communicate with their customers by embedding communications into apps, websites and business processes. In combination, our products and services permit our business customers to communicate with their customers and employees through any cloud-connected device, in any place, at any time without the often costly investment required with on-site equipment. We have a robust set of product families tailored to serve the full range of the business value chain, from the SMB market, through mid-market and enterprise markets. We provide customers with multiple deployment options, designed to provide the reliability and quality of service they demand. We provide customers the ability to integrate our cloud communications platform with many cloud-based productivity and CRM solutions, including Google’s G Suite, Zendesk, Salesforce’s Sales Cloud, Oracle, and Clio. With our ability to integrate these cloud-based, workplace tools, Vonage integrates the entire business communications value chain - from employee communications that maximize productivity to the direct engagement with customers that CPaaS provides. When combined with our MPLS network, as well as voice services over customers' broadband networks via our SmartWan solution, we create a differentiated offering.

Our Business strategy is to support the full range of business customers, using two product families: Vonage Business Cloud, based on our proprietary call processing platform that is purpose-built for SMB and mid-market customers; and Vonage Enterprise, based on Broadsoft’s call processing platform in combination with other Vonage cloud based solutions, which serves larger customers, from mid-market businesses through large enterprises. We also organized our sales force to address the full business market. We believe operating two platforms at scale enables us to deliver the right products and solutions to address the needs of diverse customers while maximizing our subscriber economics, regardless of segment served. Revenues are generated primarily through the sale of subscriptions for our UCaaS services. Our revenue generation efforts are focused on customer acquisition and retention as well as providing additional services to existing customers as they grow and scale.

Our diverse customer base spans a wide variety of industries, including manufacturing, automotive, legal, information technology, financial services, construction, real estate, engineering, healthcare, and non-profit.

Vonage Business Cloud. Vonage Business Cloud customers subscribe to our cloud-based communication services, delivered through our proprietary platform that is purpose-built for SMB and mid-market customers. Vonage Business Cloud provides a cost-effective, scalable, feature-rich solution, delivered over-the-top of a customer’s broadband, typically month-to-month without a commitment and is sold primarily through our direct telesales and online channels, and is increasingly sold through our channel partners and field sales teams. We believe the strength of the Vonage brand directly contributes to a lower-cost customer acquisition model and provides attractive subscriber economics.

Vonage Enterprise. Our Vonage Enterprise offerings are tailor-made for the large mid-market and enterprise segments. Vonage Enterprise is a feature- rich/fully managed solution that utilizes Broadsoft Inc.’s ("Broadsoft") enterprise-grade call processing platform, in combination with other cloud services like advanced contact center, video conferencing and speak2dial, and can be provided with high-level quality of service ("QoS"), which is generally delivered over our national MPLS network, with 21 network Points of Presence (POPs) across the country. Vonage can also provide QoS-level quality over-the-top of the customer’s broadband through our Smart-WAN router solution. Customers value our proprietary provisioning and feature-management tool, named Zeus, which enables the rapid deployment of solutions directly by Vonage while giving full visibility to our channel partners and our customers. Further differentiating Vonage is our robust service delivery team comprised of team members specializing in project management, voice and data provisioning, and line number porting. This team is intensely focused on providing an outstanding customer experience, and is rapidly becoming a competitive differentiator.

Our Vonage Enterprise offering is sold primarily through our channel partner, and our field and enterprise sales teams, and generally requires a three- year contract. We are a preferred provider for many of the largest master agents in the country, harnessing a network of over 20,000 sub agents selling both Vonage Enterprise and Vonage Business Cloud. We believe we have one of the largest multi-channel distribution sales platforms in our industry to serve the full range of business customers. We plan to capitalize on the growing adoption of cloud-based communications and collaboration solutions by continuing to expand our salesforce, expand into new markets, and enhance our relationships with existing customers to provide additional functionality and overall business value that can be achieved with our UCaaS platform.

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Nexmo, the Vonage API Platform. We are a global leader in the CPaaS segment of the cloud communications market, providing innovative communication APIs for text messaging and voice communications, allowing developers and enterprises to embed contextual communications into mobile apps, websites and business workflows via text, social media, chat apps and voice. With just few lines of code, developers can send and receive text messages and build programmable voice applications. Nexmo, the Vonage API Platform can scale from one API call to billions. The platform makes it easy for any of our developers to access communication services via software and APIs. Through Nexmo we have a global network of interconnected carriers delivering our API-based communications platform, enabling businesses to communicate with their customers reliably and with ease, no matter where in the world they are located. The integration of our CPaaS services to our Business offering allows our customers to address their full communications needs, from employee to employee communications through business to customer communications. With the addition of the acquisition of TokBox in August 2018, the Company has added the ability to provide video functionality to its API platform.

Consumer

For our Consumer customers, we enable users to access and utilize our services and features, via their existing internet connections, including over 3G/4G, LTE, Cable, or DSL broadband networks. This technology enables us to offer our Consumer customers attractively priced voice communication services and other features around the world on a variety of devices.

We generate revenue through the acquisition and retention of Consumer customers. We are focused on optimizing the Consumer business for profitability to improve the strong cash flows of the business. We continue our disciplined focus on marketing efficiency by shifting customer acquisition spend to our higher performing channels, improving the quality of customers we acquire and driving lower churn, all of which drive higher customer life-time value. This focus has led to a reallocation of marketing spend to our Business segment.

The result of these initiatives has been to create a strong cash flow business which provides financial stability, as well as cost synergies and structural advantages to our Business segment.

Services outside of the United States. We currently have UCaaS and consumer operations in the United States, United Kingdom, and Canada and believe that our low-cost Internet based communications platform enables us to cost effectively deliver voice and messaging services to other locations throughout the world. Through Nexmo, we have operations in the United States, United Kingdom, Hong Kong, and Singapore, and provide CPaaS solutions to our customers located in many countries around the world.

Customers in the United States represented 79% and 80% of our consolidated revenues for the three and nine months ended September 30, 2018, respectively, with the balance in Canada, the United Kingdom, China, Singapore, Netherlands and many other countries around the world.

Trends in Our Industry A number of trends in our industry have a significant effect on our results of operations and are important to an understanding of our financial statements.

Competitive landscape. We face intense competition from traditional telephone companies, wireless companies, cable companies, and alternative communication providers. Most traditional wireline and wireless telephone service providers and cable companies are substantially larger and better capitalized than we are and have the advantage of a large existing customer base. In addition, because our competitors provide other services, they often choose to offer VoIP services or other voice services as part of a bundle that includes other products, such as video, high speed Internet access, and wireless telephone service, which we do not offer. We also compete against alternative communication providers. Some of these service providers have chosen to sacrifice telephony revenue in order to gain market share and have offered their services at low prices or for free. As we continue to introduce applications that integrate different forms of voice and messaging services over multiple devices, we are facing competition from emerging competitors focused on similar integration, as well as from alternative voice communication providers. We also are subject to the risk of future disruptive technologies. In connection with our emphasis on the international long distance market in the United States, we face competition from low-cost international calling cards and VoIP providers in addition to traditional telephone companies, cable companies, and wireless companies, each of which may implement promotional pricing targeting international long distance callers.

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Regulation. Our business has developed in a relatively lightly regulated environment. The United States and other countries, however, are examining how VoIP services should be regulated. In particular, state telecommunications regulators continue to try to regulate VoIP service despite the FCC’s 2004 Vonage Preemption Order that preempted state regulation. For example, on July 28, 2015, the Minnesota Public Utility Commission found that it has authority to regulate Charter’s ‘fixed' interconnected VoIP service. In addition to regulatory matters that directly address VoIP, a number of other regulatory initiatives could impact our business. One such regulatory initiative is net neutrality. On February 26, 2015, the FCC adopted strong net neutrality rules. On December 14, 2017 the FCC voted to reverse its 2015 neutrality rules. The FCC's recent reversal of its stance on net neutrality may have a negative long term impact on businesses such as ours who rely on the Internet to create and deliver products and services. Challenges to the FCC's ruling are underway, with public interest groups, states, local municipalities and companies seeking redress in the courts and/or through legislation. See also the discussion under "Regulation" in Note 7 to our financial statements for a discussion of regulatory issues that impact us.

Key Operating Data

The table below includes key operating data that our management uses to measure the growth and operating performance of the Business segment:

Business Three Months Ended Nine Months Ended September 30, September 30,

2018 2017 2018 2017 Service revenue per customer $ 362 $ 324 $ 345 $ 323 Business revenue churn 1.1% 1.2% 1.2% 1.2%

Service Revenue per Customer. Service revenue per customer for a particular period is calculated by dividing the average monthly service revenues for the period by the average number of customers over the number of months in the period. The average number of customers is the number of customers on the first day of the period, plus the number of customers on the last day of the period, divided by two. Service revenue excludes revenues from trading and auction customers. Service revenue per customer increased from $324 for the three months ended September 30, 2017 to $362 for the three months ended September 30, 2018 primarily driven by the Company's successful efforts to attract larger business customers and to expand services provided to our existing business customers. Service revenue per customer increased from $323 for the nine months ended September 30, 2017 to $345 for the nine months ended September 30, 2018 also primarily driven by the Company's successful efforts to attract larger business customers and to expand services provided to our existing business customers.

Business Revenue Churn. Business revenue churn is calculated by dividing the revenue from customers or customer locations that have been confirmed to be foregone during a period by the simple average of the total revenue from all customers in that period. Revenue for purposes of determining Business revenue churn is service revenue excluding revenue from our trading and auction customers, and usage in excess of a customer’s contracted service plan, regulatory fees charged to customers, and credits. The simple average of total revenue from all customers during the period is the total revenue as defined herein on the first day of the period, plus the total revenue as defined herein on the last day of the period, divided by two. Terminations, as used in the calculation of churn statistics, do not include customers terminated during the period if termination occurred within the first month after activation. Other companies may calculate business revenue churn differently, and their business revenue churn data may not be directly comparable to ours. Business revenue churn decreased from 1.2% for the three months ended September 30, 2017 to 1.1% for the three months ended September 30, 2018 and remained flat at 1.2% for the nine months ended September 30, 2017 and the nine months ended September 30, 2018, respectively. Our revenue churn will fluctuate over time due to economic conditions, seasonality in certain customer's operations, loss of customers who are acquired, and competitive pressures including promotional pricing. We are continuing to invest in our overall quality of service which includes customer care headcount and systems, billing systems, on- boarding processes and self-service options to ensure we scale our processes to our growth and continue to improve the overall customer experience.

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The table below includes key operating data that our management uses to measure the growth and operating performance of the Consumer segment:

Consumer Three Months Ended Nine Months Ended September 30, September 30,

2018 2017 2018 2017 Average monthly revenues per subscriber line $ 26.30 $ 26.29 $ 26.41 $ 26.18 Subscriber lines (at period end) 1,341,662 1,543,760 1,341,662 1,543,760 Customer churn 1.8% 1.9% 1.8% 2.0%

Average Monthly Revenues per Subscriber Line. Average monthly revenues per subscriber line for a particular period is calculated by dividing our revenues for that period by the simple average number of subscriber lines for the period, and dividing the result by the number of months in the period. The simple average number of subscriber lines for the period is the number of subscriber lines on the first day of the period, plus the number of subscriber lines on the last day of the period, divided by two. Our average monthly revenues per subscriber line increased slightly from $26.29 for the three months ended September 30, 2017 to $26.30 for the three months ended September 30, 2018 and increased slightly from $26.18 for the nine months ended September 30, 2017 to $26.41 for the nine months ended September 30, 2018, respectively, which is driven by the Company's ability to retain its more tenured customers.

Subscriber Lines. Our subscriber lines include, as of a particular date, all paid subscriber lines from which a customer can make an outbound telephone call on that date. Our subscriber lines include fax lines, including fax lines bundled with subscriber lines in our small office home office calling plans and soft phones, but do not include our virtual phone numbers and toll free numbers, which only allow inbound telephone calls to customers. Subscriber lines decreased from 1,543,760 as of September 30, 2017 to 1,341,662 as of September 30, 2018, reflecting planned actions to enhance the profitability of the assisted sales channel by eliminating lower performing locations and restructuring the pricing offers, and to shift investment to our business market.

Customer Churn. Customer churn is calculated by dividing the number of customers that have terminated during a period by the simple average of number of customers in a given period. The simple average number of customers during the period is the number of customers on the first day of the period, plus the number of customers on the last day of the period, divided by two. Terminations, as used in the calculation of churn statistics, do not include customers terminated during the period if termination occurred within the first month after activation. Other companies may calculate customer churn differently, and their customer churn data may not be directly comparable to ours. Customer churn decreased from 1.9% for the three months ended September 30, 2017 to 1.8% for the three months ended September 30, 2018 and decreased from 2.0% for the nine months ended September 30, 2017 to 1.8% for the nine months ended September 30, 2018, respectively. We monitor customer churn on a daily basis and use it as an indicator of the level of customer satisfaction. Customers who have been with us for a year or more tend to have a lower churn rate than customers who have not. In addition, our customers who are international callers generally churn at a lower rate than customers who are domestic callers. Our customer churn will fluctuate over time due to economic conditions, competitive pressures including promotional pricing targeting international long distance callers, marketplace perception of our services, and our ability to provide high quality customer care and network quality and add future innovative products and services.

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Results of Operations The following table sets forth, as a percentage of total revenues, our condensed consolidated statements of income for the periods indicated:

Three Months Ended Nine Months Ended September 30, September 30,

2018 2017 2018 2017

Total revenues 100 % 100 % 100 % 100 %

Operating Expenses: Cost of revenues (exclusive of depreciation and amortization) 40 41 41 41 Sales and marketing 28 29 30 31 Engineering and development 6 3 4 3 General and administrative 14 10 12 13 Depreciation and amortization 6 7 7 7 Total operating expenses 94 90 94 95 Income from operations 6 10 6 5 Other Income (Expense): Interest expense (1) (2) (1) (1) Other income (expense), net — — — — Total other income (expense), net (1) (2) (1) (1) Income before income taxes 5 8 5 4 Income tax (expense) benefit (1) (4) 1 (1) Net income 4 % 4 % 6 % 3 %

Management's Discussion of the Results of Operations for the Three and Nine Months Ended September 30, 2018 and 2017

The Company reported income before income taxes of $12,158 and $21,270 for the three months ended September 30, 2018 and 2017, respectively. The decrease was primarily driven by higher other operating expenses of $16,811 driven by increases in salary costs due to higher headcount as a result of the acquisition of TokBox along with higher acquisition related costs associated with TokBox and NewVoiceMedia, as well as increases in engineering and development expenses in connection with the Company's continued transformation focused on innovation, offset by higher gross margin discussed below. The Company reported income before income taxes of $37,027 and $25,964 for the nine months ended September 30, 2018 and 2017, respectively. The increase in income before income taxes as compared to the prior year was primarily caused by higher gross margin discussed below offset in part by higher other operating expenses of $3,795, as a result of increased engineering and development expenses as the Company continues to increase focus on innovation.

The Company reported net income of $9,588 and $10,602 for the three months ended September 30, 2018 and 2017 and $42,671 and $21,340 for the nine months ended September 30, 2018 and 2017, respectively. The decrease in net income for the three months ended September 30, 2018 is mainly due to the aforementioned decrease in income before income taxes offset by the decrease in income tax expense of $8,098. The increase in net income for the nine months ended September 30, 2018 is primarily the result of the aforementioned increase in income before income taxes and by a decrease in income tax expense of $10,268 primarily driven by the exercise of stock options and vesting of restricted stock during the first quarter of 2018.

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We calculate gross margin in order to evaluate operating revenues as total revenues less cost of revenues, which primarily consists of fees that we pay to third parties on an ongoing basis in order to provide our services and costs incurred when a customer first subscribes to our service. The following table presents consolidated revenues, cost of revenues and the composition of gross margin for the three and nine months ended September 30, 2018 and 2017:

(in thousands, except percentages) Three Months Ended Nine Months Ended September 30, September 30, Dollar Percent Dollar Percent 2018 2017 Change Change 2018 2017 Change Change Revenues $ 261,531 $ 253,083 $ 8,448 3% $ 774,979 $ 748,266 $ 26,713 4% Cost of revenues (1) 104,351 102,938 1,413 1% 315,122 301,688 13,434 4% Gross margin $ 157,180 $ 150,145 $ 7,035 5% $ 459,857 $ 446,578 $ 13,279 3%

(1) Excludes depreciation and amortization of $6,386 and $6,852 for the three months ended September 30, 2018 and 2017, respectively, and $19,046 and $20,497 for the nine months ended September 30, 2018 and 2017, respectively.

Consolidated revenues and cost of revenues were impacted by the following trends and uncertainties:

Three Months Ended September 30, 2018 compared to Three Months Ended September 30, 2017

Consolidated revenues increased 3% for the three months ended September 30, 2018 as compared to the prior year period. The increase is primarily due to Business customer growth of 12% driving an increase in revenues of $24,329 offset by declining consumer revenues of $15,881 in connection with the continued decline of subscriber lines. As the Company reallocates resources to increase market share in its Business communications platforms we will continue to see accelerating consolidated growth rates as Business growing significantly faster than Consumer is declining.

Cost of revenues increased 1% for the three months ended September 30, 2018 as compared to the prior year period driven by costs incurred in servicing our business customers of $11,769 due to the increase in customer growth. This was offset by a decrease in costs associated with our consumer costs of $10,356 as subscriber lines continues to decline resulting in lower international and long-distance termination costs.

Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017

Consolidated revenues increased 4% for the nine months ended September 30, 2018 as compared to the prior year period. The increase is primarily due to business customer growth driving an increase in revenues of $73,323 offset by declining consumer revenues of $46,610 in connection with the continued decline of subscriber lines. The Company continues to expect that the Consumer portion of the Company's overall business will become less significant as the Company reallocates resources to increase market share in its Business communications platforms.

Cost of revenues increased 4% for the nine months ended September 30, 2018 as compared to the prior year period driven by increased costs incurred in servicing our business customers of $42,017 due to an increase in customers of 12% along with costs associated with trading activities at Nexmo that are recognized on a gross basis beginning in the second quarter of 2017 which were reported as net in the prior year quarter. This was offset by a decrease in costs in Consumer of $28,583 as subscriber lines continues to decline resulting in lower international and long-distance termination costs.

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Business Gross Margin for the Three and Nine Months Ended September 30, 2018 and 2017

Three Months Ended Nine Months Ended September 30, September 30, Dollar Percent Dollar Percent (in thousands, except percentages) 2018 2017 Change Change 2018 2017 Change Change Revenues Service revenues $ 133,709 $ 108,819 $ 24,890 23 % $ 377,703 $ 303,814 $ 73,889 24 % Access and product revenues(1) 12,427 13,749 (1,322) (10)% 37,674 41,622 (3,948) (9)% Service, access and product revenues 146,136 122,568 23,568 19 % 415,377 345,436 69,941 20 % USF revenues 7,499 6,738 761 11 % 22,768 19,386 3,382 17 % Total revenues 153,635 129,306 24,329 19 % 438,145 364,822 73,323 20 %

Cost of revenues Service cost of revenues (2) 59,600 49,078 10,522 21 % 172,917 134,041 38,876 29 % Access and product cost of revenues (1) 14,887 14,401 486 3 % 43,291 43,537 (246) (1)% Service, access and product cost of revenues 74,487 63,479 11,008 17 % 216,208 177,578 38,630 22 % USF cost of revenues 7,499 6,738 761 11 % 22,773 19,386 3,387 17 % Total cost of revenues 81,986 70,217 11,769 17 % 238,981 196,964 42,017 21 %

Segment gross margin Service margin 74,109 59,741 14,368 24 % 204,786 169,773 35,013 21 % Gross margin ex-USF (Service, access and product margin) 71,649 59,089 12,560 21 % 199,169 167,858 31,311 19 % Segment gross margin $ 71,649 $ 59,089 $ 12,560 21 % $ 199,164 $ 167,858 $ 31,306 19 %

Segment gross Margin % Service margin % 55.4% 54.9% 54.2% 55.9% Gross margin ex-USF (Service, access and product margin) % 49.0% 48.2% 47.9% 48.6% Segment gross margin % 46.6% 45.7% 45.5% 46.0%

(1) Includes customer premise equipment, access, and shipping and handling. (2) Excludes depreciation and amortization of $5,141 and $5,053 for the three months ended September 30, 2018 and 2017, respectively and $15,092 and $14,931 for the nine months ended September 30, 2018 and 2017, respectively.

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Three Months Ended September 30, 2018 compared to Three Months Ended September 30, 2017 The following table describes the increase in business gross margin for the three months ended September 30, 2018 as compared to the three months ended September 30, 2017:

(in thousands) Service gross margin increased 24% primarily due to continued growth of our service offerings to our Business customers consistent with our overall organic growth in our Business customer base of 12% as compared to the prior year quarter $ 14,368 Access and product gross margin decreased due to higher costs providing access services to Business customers during the current quarter (1,808) Increase in segment gross margin $ 12,560 The service gross margin percentage increased to 55.4% for the three months ended September 30, 2018 from 54.9% for the three months ended September 30, 2017. The increase in business service gross margin percentage is a result of the sale of a greater proportion of higher margin services across our Business segment during the current quarter as compared to the same period in the prior year offset along with lower credits. Our gross margin percentage may continue to be impacted by changes in the mix of service offerings provided to our customers across our Business segment.

Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017 The following table describes the increase in business gross margin for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017:

(in thousands) Service gross margin increased 21% primarily due to continued growth of our service offerings to our Business customers consistent with our overall organic growth in our Business customer base of 12% as compared to the prior year period $ 35,013 Access and product gross margin decreased due to higher costs providing access services to Business customers during the current period (3,702) USF gross margin decreased mainly due to payment during the first quarter of 2018 for USF fees not collected in 2017 (5) Increase in segment gross margin $ 31,306 While service gross margin has increased, service gross margin percentage decreased to 54.2% for the nine months ended September 30, 2018 from 55.9% for the nine months ended September 30, 2017. The decrease in business service gross margin percentage is a result of the sale of a greater proportion of lower margin services across our Business segment during the nine months ended September 30, 2018 as compared to the same period in the prior year along with lower credits. Our gross margin percentage may continue to be impacted by changes in the mix of service offerings provided to our customers across our Business segment.

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Consumer Gross Margin for the Three and Nine Months Ended September 30, 2018 and 2017

Three Months Ended Nine Months Ended September 30, September 30, Dollar Percent Dollar Percent (in thousands, except percentages) 2018 2017 Change Change 2018 2017 Change Change Revenues Service revenues $ 97,093 $ 111,913 $ (14,820) (13)% $ 301,954 $ 346,666 $ (44,712) (13)% Access and product revenues(1) 92 94 (2) (2)% 472 498 (26) (5)% Service, access and product revenues 97,185 112,007 (14,822) (13)% 302,426 347,164 (44,738) (13)% USF revenues 10,711 11,770 (1,059) (9)% 34,408 36,280 (1,872) (5)% Total revenues 107,896 123,777 (15,881) (13)% 336,834 383,444 (46,610) (12)%

Cost of revenues Service cost of revenues (2) 10,661 19,434 (8,773) (45)% 37,050 62,969 (25,919) (41)% Access and product cost of revenues (1) 993 1,517 (524) (35)% 4,657 5,475 (818) (15)% Service, access and product cost of revenues 11,654 20,951 (9,297) (44)% 41,707 68,444 (26,737) (39)% USF cost of revenues 10,711 11,770 (1,059) (9)% 34,434 36,280 (1,846) (5)% Total cost of revenues 22,365 32,721 (10,356) (32)% 76,141 104,724 (28,583) (27)%

Segment gross margin Service margin 86,432 92,479 (6,047) (7)% 264,904 283,697 (18,793) (7)% Gross margin ex-USF (Service, access and product margin) 85,531 91,056 (5,525) (6)% 260,719 278,720 (18,001) (6)% Segment gross margin $ 85,531 $ 91,056 $ (5,525) (6)% $ 260,693 $ 278,720 $ (18,027) (6)%

Segment gross Margin % Service margin % 89.0% 82.6% 87.7% 81.8% Gross margin ex-USF (Service, access and product margin) % 88.0% 81.3% 86.2% 80.3% Segment gross margin % 79.3% 73.6% 77.4% 72.7%

(1) Includes customer premise equipment and shipping and handling. (2) Excludes depreciation and amortization of $1,245 and $1,799 for the three months ended September 30, 2018 and 2017, respectively and $3,954 and $5,566 for the nine months ended September 30, 2018 and 2017, respectively.

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Three Months Ended September 30, 2018 compared to Three Months Ended September 30, 2017 The following table describes the decrease in consumer gross margin for the three months ended September 30, 2018 as compared to the three months ended September 30, 2017:

(in thousands) Service gross margin decreased primarily due to a decrease in subscriber lines of 13% resulting in lower gross margin of $7,961 as we have reallocated resources focused on attracting business customers. This was offset by a slight increase in average revenue per customer and lower overall costs incurred by the Consumer segment resulting in increased gross margin of $1,914 $ (6,047) Access and product gross margin increased 37% primarily due lower equipment costs associated with sales to customers during the current quarter 522 Decrease in segment gross margin $ (5,525) Consumer service gross margin percentage increased to 89.0% for the three months ended September 30, 2018 from 82.6% for the three months ended September 30, 2017 due to lower international and domestic termination rates and the allocation of certain shared network costs to Business as that revenue becomes a greater proportion of the whole. The increase in Consumer service margin percentage is primarily driven by overall lower costs attributed to consumer services as the Company shifts resources towards attracting more profitable business customers.

Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017 The following table describes the decrease in consumer gross margin for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017:

(in thousands) Service gross margin decreased primarily due to a decrease in subscriber lines of 13% resulting in lower gross margin of $20,680 as we have reallocated resources to focus on attaining business customers. This was offset by a slight increase in average revenue per customer and lower overall costs incurred by the Consumer segment resulting in increased gross margin of $1,887 $ (18,793) Access and product gross margin increased 16% primarily due lower equipment costs associated with sales to customers during the nine months 792 USF gross margin decreased mainly due to payment during the quarter for USF fees not collected in 2017 (26) Decrease in segment gross margin $ (18,027) Consumer service gross margin percentage increased to 87.7% for the nine months ended September 30, 2018 from 81.8% for the nine months ended September 30, 2017 due to lower international and domestic termination rates and the allocation of certain shared network costs to Business as that revenue becomes a greater proportion of the whole. The increase in consumer service margin percentage is primarily driven by overall lower costs attributed to consumer services as the Company shifts resources towards attracting more profitable business customers.

Other Operating Expenses

The following table presents our other operating costs during the three and nine months ended September 30, 2018 and 2017, respectively:

Three Months Ended Nine Months Ended September 30, September 30, Dollar Percent Dollar Percent (in thousands, except percentages) 2018 2017 Change Change 2018 2017 Change Change Sales and marketing $ 74,380 $ 73,576 $ 804 1 % $ 229,201 $ 235,245 $ (6,044) (3)% Engineering and development 14,309 6,956 7,353 106 % 35,504 21,996 13,508 61 % General and administrative 37,620 26,811 10,809 40 % 97,376 98,411 (1,035) (1)% Depreciation and amortization 16,024 18,179 (2,155) (12)% 51,886 54,520 (2,634) (5)% Total other operating expenses $ 142,333 $ 125,522 $ 16,811 13 % $ 413,967 $ 410,172 $ 3,795 1 %

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Three Months Ended September 30, 2018 compared to Three Months Ended September 30, 2017

Total other operating expenses increased by $16,811 as compared to the three months ended September 30, 2017 due to the following: • Engineering and development expense increased by $7,353 in connection with the Company's continued transformation focused on innovation especially in regards to developing further functionality related to its proprietary platform in order to support customers through the mid-market and enterprise sector. • General and administrative expense increased by $10,809 due to acquisition related costs associated with the acquisition of TokBox in August 2018 and due diligence costs associated with the acquisition of NewVoiceMedia combined with higher personnel costs due the increased headcount following the acquisition of TokBox. • Depreciation and amortization expense decreased by $2,155 primarily due to the expiration of the Company's capital lease in August 2017 associated with its office location in Holmdel, New Jersey.

Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017

Total other operating expenses increased by $3,795 as compared to the nine months ended September 30, 2017 due to the following: • Sales and marketing expense decreased by $6,044 due to a reduction in marketing through traditional media outlets. Also attributing to the decline in sales and marketing expense was a decrease in commissions upon adoption of Topic 606 as costs to acquire Business customers are deferred and amortized over the life of the associated customer. Prior to adoption, commissions were expensed as they were incurred. • Engineering and development expense increased by $13,508 in connection with the Company's continued transformation focused on innovation especially in regards to developing further functionality related to its proprietary platform in order to support customers through the mid-market and enterprise sector. • General and administrative expense decreased by $1,035 due in part to acquisition related compensation for Nexmo and severance costs incurred during the prior year period which did not occur during the nine months ended September 30, 2018 offset in part by acquisition related costs in the current quarter related to the acquisition of TokBox and NewVoiceMedia. • Depreciation and amortization expense decreased by $2,634 primarily due to the expiration of the Company's capital lease in August 2017 associated with its office location in Holmdel, New Jersey offset in part by accelerated software amortization.

Other Income (Expense)

(in thousands, except percentages) Three Months Ended Nine Months Ended September 30, September 30, Dollar Percent Dollar Percent 2018 2017 Change Change 2018 2017 Change Change Interest expense $ (3,036) $ (3,821) $ (785) (21)% $ (9,294) $ (11,385) $ (2,091) (18)% Other income (expense), net 347 468 (121) (26)% 431 943 (512) (54)% $ (2,689) $ (3,353) $ 664 $ (8,863) $ (10,442) $ 1,579

Three Months Ended September 30, 2018 compared to Three Months Ended September 30, 2017

Interest expense. The decrease in interest expense of $785, or 21%, was mainly due to lower principal balances on our 2018 Credit Facility that we entered into in July 2018 and our 2016 Credit Facility that we entered into in July 2016 as compared to the prior year on our 2016 Credit Facility, which were offset by slightly higher interest rates.

Nine Months Ended September 30, 2018 compared to Nine Months Ended September 30, 2017

Interest expense. The decrease in interest expense of $2,091, or 18%, was mainly due to lower principal balances on our 2018 Credit Facility that we entered into in July 2018 and our 2016 Credit Facility that we entered into in July 2016 as compared to the prior year on our 2016 Credit Facility, which were offset by slightly higher interest rates.

Income Taxes We recognize income tax expense equal to pre-tax income multiplied by our effective income tax rate. In addition, adjustments are recorded for discrete period items and changes to our state effective tax rate which can cause the rate to fluctuate from quarter to quarter.

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During the three months ended September 30, 2018, we recognized an additional discrete period tax benefit of $1,912 related to excess tax benefits on equity compensation recognized during the quarter. During the nine months ended September 30, 2018, we recognized a discrete period tax benefit of $19,228 related to excess tax benefits on equity compensation recognized during the nine months ended September 30, 2018. During the three and nine months ended September 30, 2017, we recognized discrete period tax benefits of $9,539 and $1,433, respectively, which were recognized related to excess tax benefits on equity compensation recognized primarily in the first quarter of 2017 as well as an adjustment to our deferred asset related to stock compensation.

Liquidity and Capital Resources For the nine months ended September 30, 2018, we generated higher net cash from operations compared to the prior year. We expect to continue to balance efforts to grow our revenue while consistently achieving operating profitability. To grow our revenue, we continue to make investments in growth initiatives, marketing, application development, network quality and expansion, and customer care. Although we believe we will achieve consistent profitability in the future, we ultimately may not be successful and we may not achieve consistent profitability. We believe that cash flow from operations and cash on hand will fund our operations for at least the next twelve months. The following table sets forth a summary of our cash flows for the periods indicated:

Nine Months Ended September 30, Dollar (in thousands) 2018 2017 Change Net cash provided by operating activities $ 94,463 $ 80,600 $ 13,863 Net cash used in investing activities (49,184) (23,626) (25,558) Net cash used in financing activities (50,130) (56,757) 6,627

Operating Activities Cash provided by operating activities increased to $94,463 for the nine months ended September 30, 2018 compared to $80,600 for the nine months ended September 30, 2017, primarily due to an increase in earnings as compared to the prior period, offset by a decrease in stock compensation expense during the nine months ended September 30, 2018 of $4,502 driven by higher acquisition related stock compensation expense in the prior year period and a decrease in deferred income tax expense during the nine months ended September 30, 2018 of $11,981.

Changes in working capital include changes in accounts receivable, inventory, prepaid and other assets, accounts payable, accrued and other liabilities, and deferred revenue and costs. Cash used for working capital requirements decreased by $2,115 during the nine months ended September 30, 2018 compared to the prior year period primarily due to the timing of payments.

Investing Activities Cash used in investing activities for the nine months ended September 30, 2018 of $49,184 was mainly attributable to cash used for the acquisition of TokBox on August 1, 2018 of $32,299 along with the purchase of capital expenditures of $10,687 and development of software assets of $6,198. Cash used in investing activities for the nine months ended September 30, 2017 of $23,626 was mainly attributable to the purchase of capital expenditures of $15,790 and development of software assets of $9,438, offset by the sales of marketable securities of $602 and cash proceeds of $1,000 associated with the sale of the Hosted Infrastructure product line in the second quarter of 2017.

Financing Activities Cash used in financing activities for the nine months ended September 30, 2018 of $50,130 was primarily attributable to $293,688 of payments made to retire the 2016 credit facility along with additional repayments under the 2018 credit facility in the third quarter of 2018, payments for deferred financing costs of $3,376, $119 in capital lease payments, and $31,064 in employee taxes paid on withholding shares, offset by $272,000 in proceeds received from draws on the 2016 credit facility and the execution of the 2018 credit facility and $6,117 in proceeds received from the exercise of stock options.

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Cash used in financing activities for the nine months ended September 30, 2017 of $56,757 was primarily attributable to $14,063 in 2016 term note principal payments, $42,000 in 2016 revolving credit facility principal payments, $2,500 in patent license payments, $3,201 in capital lease payments, $9,542 in common stock repurchases, and $14,927 in employee taxes paid on withholding shares, offset by $14,476 in proceeds received from the exercise of stock options and $15,000 in proceeds received from issuance of notes payable. Available Borrowings Under the 2018 Credit Facility We maintain significant availability under our lines of credit to meet our short-term liquidity requirements. As of September 30, 2018, amounts available under the 2018 Credit Facility totaled $386 million. On October 29, 2018, the Company borrowed $335 million against its revolving credit facility in order to acquire NewVoiceMedia. On July 31, 2018, the Company entered into the 2018 Credit Facility consisting of a $100 million senior secured term loan and a $500 million revolving credit facility bearing interest at LIBOR plus 2.25% at closing. The 2018 Credit Facility represents a $150 million increase from the 2016 Credit Agreement and has a maturity date of July 31, 2023. The Company used $232 million of the proceeds from the 2018 Credit Facility plus cash on hand to retire all outstanding indebtedness under the 2016 Credit Facility and to cover transaction fees and expenses. The co-borrowers under the 2018 Credit Facility are the Company and Vonage America Inc., the Company’s wholly owned subsidiary. Obligations under the 2018 Credit Facility are guaranteed, fully and unconditionally, by the Company’s other United States subsidiaries and are secured by substantially all of the assets of each borrower and each guarantor.

State and Local Sales Taxes We have contingent liabilities for state and local sales taxes. As of September 30, 2018, we had a reserve of $1,868. If our ultimate liability exceeds this amount, it could affect our liquidity unfavorably. However, we do not believe it will significantly impair our liquidity.

Capital Expenditures Our capital expenditures for the nine months ended September 30, 2018 were $16,885, of which $6,198 was for software acquisition and development. The majority of these expenditures are comprised of investments in information technology and systems infrastructure, including an electronic data warehouse, online customer service, and customer management platforms. For 2018, we believe our capital and software expenditures will be approximately $25,000. Common Stock Repurchases On December 9, 2014, Vonage's Board of Directors authorized a new program for the Company to repurchase up to $100.0 million of its outstanding common stock. Repurchases under the program are expected to be made over a four-year period ending on December 31, 2018.

Under the current program, the timing and amount of repurchases will be determined by management based on its evaluation of market conditions, the trading price of the stock and will vary based on available capital resources and other financial and operational performance, market conditions, securities law limitations, and other factors. Repurchases may be made in the open market or through private transactions from time to time. The repurchases will be made using available cash balances.

As of September 30, 2018, approximately $42,533 remained of our 2014 $100.0 million repurchase program. The repurchase program expires on December 31, 2018 but may be suspended or discontinued at any time without notice.

Off-Balance Sheet Arrangements Obligations under Certain Guarantee Contracts We enter guarantee arrangements in the normal course of business to facilitate transactions with third parties. These arrangements include financial and performance guarantees, stand-by letters of credit, debt guarantees and indemnifications. As of September 30, 2018 and December 31, 2017 we had stand-by letters of credit totaling $1,513 and $1,563, respectively.

Contractual Obligations and Commitments Except as set forth below and in Note 7. Commitments and Contingencies included in Part 1, Item 1 of this Form 10-Q, there were no significant changes in our commitments under contractual obligations as disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

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Contingencies There has been and may be in the future substantial litigation in the areas in which we operate regarding alleged infringement of third-party patents and other intellectual property rights, commercial, employment and other matters. We record a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss or range of loss can be reasonably estimated. Such legal proceedings are inherently unpredictable and subject to further uncertainties. Should any of these estimates and assumptions change it is possible that the resolution of the matters described in Note 7. Commitments and Contingencies included in Part 1, Item 1 of this Form 10-Q could have a material adverse effect on our consolidated financial position, cash flows or results of operations. Critical Accounting Policies Our consolidated statements and accompanying notes are prepared in accordance with U.S. GAAP. Our significant accounting policies are described in Note 2, Summary of Significant Accounting Policies to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017. The preparation of financial statements and related disclosures in compliance with GAAP requires management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses as well as the disclosure of contingent assets and liabilities. The application of these policies involves judgment regarding future events and these judgments could materially affect the financial statements and disclosures based on varying assumptions, which may be appropriate to use. We identify our most critical accounting policies as those that are the most pervasive and important to the portrayal of our financial position and results of operations, and those that require the most difficult, subjective or complex judgments by management regarding estimates. Our critical accounting policies include revenue recognition, valuation of goodwill and intangible assets, income taxes and capitalized software. Effective January 1, 2018, the Company adopted ASC Topic 606. Refer to Note 3, Revenue Recognition for changes to our critical accounting policy with respect to recognition of revenue for contracts with customers as a result of the adoption. As of September 30, 2018, our goodwill is attributable to our Business operating segment. We perform our annual test of goodwill on October 1st. Additionally, we will assess our goodwill for impairment between annual tests when specific circumstances dictate.

Item 3. Quantitative and Qualitative Disclosures about Market Risk We are exposed to financial market risks, including changes in currency exchange rates and interest rates.

Foreign Exchange Risk We sell our products and services primarily in the United States, Canada, the European Union, and Asia. A portion of our sales denominated in Euros, the Canadian Dollar, and the British Pound, which are affected by changes in currency exchange rates. Our financial results could be affected by changes in foreign currency exchange rates, although foreign exchange risks have not been material to our financial position or results of operations to date.

Interest Rate and Debt Risk Our exposure to market risk for changes in interest rates primarily relates to our long-term debt. In order to hedge the variability of expected future cash interest payments related to our credit facilities we have entered into three interest rate swap agreements which were executed on July 14, 2017. The swaps have an aggregate notional amount of $150 million and are effective on July 31, 2017 through June, 3, 2020. Under the swaps our interest rate is fixed at 4.7%. The interest rate swaps will be accounted for as cash flow hedges in accordance with ASC 815, Derivatives and Hedging.

As of September 30, 2018, if the interest rate on our variable rate debt changed by 1% on our 2018 term note, our annual debt service payment would change by approximately $300. As of September 30, 2018, if the interest rate on our variable rate debt changed by 1% on our 2016 revolving credit facility, our annual debt service payment would change by approximately $300.

45

Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures. Based on the evaluation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) required by Securities Exchange Act Rules 13a-15(b) or 15d-15(b), our Chief Executive Officer and our Chief Financial Officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Controls. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

46

Part II—Other Information

Item 1. Legal Proceedings We are subject to a number of lawsuits, government investigations and claims arising out of the conduct of our business. See a discussion of our litigation matters in Note 7 of Notes to our Condensed Consolidated Financial Statements, which is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Item 2(a) and (b) are not applicable. (c) Common stock repurchases (in thousands, except per share value): During the three months ended September 30, 2018, we did not repurchase Vonage Holdings Corp. common stock pursuant to the 2014 $100.0 million repurchase program. When executed, repurchases occur in the open market and pursuant to a trading plan under Rule 10b5-1 of the Securities Exchange Act of 1934. As of September 30, 2018, approximately $42,533 remained of our 2014 $100.0 million repurchase program.

Item 3. Defaults Upon Senior Securities None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information None.

47

Item 6. Exhibits

See accompanying Exhibit Index for a list of the exhibits filed or furnished with this Quarterly Report on Form 10-Q.

EXHIBIT INDEX

2.1 Stock Purchase Agreement, dated July 30, 2018, by and among Nexmo Inc., Telefónica Digital Ltd and Telefónica Digital, Inc.(1)

2.2 Recommended Offer by Vonage Holdings Corp. for NewVoiceMedia Limited, dated September 20, 2018(2)

Second Amended and Restated Credit Agreement, dated July 31, 2018, by and among Vonage America Inc., Vonage Holdings Corp., JPMorgan 10.1 Chase Bank, N.A. as Administrative Agent, Citizens Bank, N.A. and Bank of America, N.A. as Syndication Agreement, and the Lenders party thereto(3)

10.2 Form of Irrevocable Undertaking (Director)(4)

10.3 Form of Irrevocable Undertaking (Investor)(4)

Implementation and Management Warranty Deed, dated September 20, 2018, among each Warrantor provided therein, NewVoiceMedia Limited 10.4 and Vonage Holdings Corp.(2)

Certification of the Company’s Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant 31.1 to Section 302 of the Sarbanes-Oxley Act of 2002(5)

Certification of the Company’s Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant 31.2 to Section 302 of the Sarbanes-Oxley Act of 2002(5)

Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to 32.1 Section 906 of the Sarbanes-Oxley Act of 2002(5)

The following financial statements from Vonage Holdings Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2018, filed with the Securities and Exchange Commission on November 2, 2018, formatted in XBRL (eXtensible Business Reporting Language): 101 (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; (v) the Condensed Consolidated Statement of Stockholders’ Equity; and (vi) the Notes to Condensed Consolidated Financial Statements.

(1) Incorporated by reference to Vonage Holdings Corp.'s Amended Current Report on Form 8-K (File No. 001-32887) filed on September 18, 2018. (2) Incorporated by reference to Vonage Holdings Corp.'s Current Report on Form 8-K (File No. 001-32887) filed on November 2, 2018. (3) Incorporated by reference to Vonage Holdings Corp.'s Current Report on Form 8-K (File No. 001-32887) filed on August 2, 2018. (4) Incorporated by reference to Vonage Holdings Corp.'s Current Report on Form 8-K (File No. 001-32887) filed on September 20, 2018. (5) Filed herewith.

48

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

VONAGE HOLDINGS CORP.

Dated: November 2, 2018 By: /s/ David T. Pearson David T. Pearson Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)

49 Exhibit 10.3

IMPLEMENTATION

AND

MANAGEMENT WARRANTY DEED

AMONG

EACH WARRANTOR

THE COMPANY

AND

THE BUYER

September 20, 2018 CONTENTS

Clause Page 1. INTERPRETATION 1 2. EFFECT 16 3. PRE-COMPLETION OBLIGATIONS 17 4. MANAGEMENT WARRANTIES 19 5. COMPLETION AND FIRST CLOSING DATE 21 6. POST COMPLETION UNDERTAKINGS 22 7. PRESERVATION OF INFORMATION 24 8. CONFIDENTIALITY 25 9. GENERAL 26 10. ENTIRE AGREEMENT 27 11. ASSIGNMENT 27 12. NOTICES 28 13. SERVICE OF PROCESS 29 14. INVALIDITY 29 15. COUNTERPARTS 29 16. DELIVERY 29 17. GOVERNING LAW AND JURISDICTION 29 Schedule 1 Management Warranties 31 Schedule 2 Limitations and Remedies 62 Schedule 3 Conduct of Business Pending Completion 68 Schedule 4 Warrantors 72 THIS IMPLEMENTATION AND MANAGEMENT WARRANTY DEED (this “Deed”) is made as of September 20, 2018

AMONG:

(1) The Persons whose names and addresses are set out in Schedule 4 to this Deed (collectively, the “Warrantors” and each a “Warrantor”);

(2) NewVoiceMedia Limited a company incorporated in England & Wales (registered no. 03602868), whose registered office is at NewVoiceMedia House, Jays Close, Basingstoke, Hampshire RG22 4BS (the “Company”); and

(3) Vonage Holdings Corp. a company incorporated in Delaware, whose principal place of business is at 23 Main Street, Holmdel, New Jersey 07733, United States (the “Buyer”).

For purposes of this Deed, capitalized terms not otherwise defined herein shall have the meanings specified in Clause 1.3.

INTRODUCTION

(A) On the date hereof, the respective boards of directors of the Company and the Buyer announced that they had reached agreement on the terms of a recommended offer (the “Offer”) to be made by the Buyer to acquire all of the issued and outstanding, and to be issued, shares (the “Shares”) in the capital of the Company.

(B) In connection with the Offer and on the terms set out in this Deed, (i) each Warrantor has agreed to give the Management Warranties; and (ii) each Warrantor and the Company has agreed to comply, or procure compliance with, certain obligations relating to the conduct of business prior to Completion.

(C) The Buyer can only make Claims if the Offer is completed in accordance with its terms.

IT IS AGREED:

1 1. INTERPRETATION

1.1 The Schedules form part of this Deed and have the same force and effect as if set out in the body of this Deed. Any reference to this Deed includes the Schedules.

1.2 References to a document in the “agreed form” are to that document in the form agreed to and initialled for the purposes of identification by or on behalf of the Company and the Buyer.

1.3 In this Deed, the following terms have the meanings specified or referred to in this Clause 1.3, which meanings shall be equally applicable to both the singular and plural forms.

“Accounts” means the audited consolidated accounts of the Company and the accounts of the Company Subsidiaries (prepared under section 398 or 399 of the Companies Act 2006) for the accounting period ended on the Accounts Date, including the statement of financial position as at the Accounts Date and the statement of comprehensive income, statement of cash flows and statement of changes in equity for the accounting period ended on the Accounts Date, and the related notes to such accounts as required by law and applicable accounting standards.

“Accounts Date” means 31 January 2018.

“Acquired Companies” means, collectively, the Company and the Company Subsidiaries.

“Acquisition Facility” has the meaning set forth in Clause 11.2.2.

“Act” has the meaning set forth in Clause 9.6.

“Action” means any claim, action, hearing, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, whether civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly, through one or more intermediaries, Controls, is Controlled by or is under Common Control with such Person.

“Aggregate Cap” means, in respect of each Warrantor, the amount set out against such Warrantor’s name in column (4) of the table in Schedule 4.

“Allocable Share” means, with respect to each Warrantor, the percentage set forth opposite such Warrantor’s name in Schedule 4.

“Anti-Corruption Laws” means the U.S. Foreign Corrupt Practices Act of 1977, UK Bribery Act 2010, and all other applicable anti-corruption Laws.

“Anti-Money Laundering Laws” means laws and regulations related to terrorism financing or money laundering, including the Uniting and Strengthening America by Providing Appropriate

2 Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the “PATRIOT Act”) (Title III of Pub. L. 107-56), and The Currency and Foreign Transactions Reporting Act (also known as the “Bank Secrecy Act”) (31 U.S.C. §§ 5311-5330 and 12 U.S.C. §§ 1818(s), 1820(b) and 1951-1959), the UK Proceeds of Crime Act 2002, the UK Terrorism Act 2000, as amended, or any non-U.S. Laws related to terrorism financing or money laundering as applicable to any of the Acquired Companies.

“Benefit Plans” means, collectively, a plan, program, policy, practice, contract or other arrangement providing for compensation, severance, vesting acceleration, change in control pay, termination pay, deferred compensation, profit-sharing, bonuses, commission or other incentives, performance awards, stock or stock-related awards, insurance coverage, vacation or other paid- time off benefits, disability benefits, death benefits, hospitalization benefits, retirement benefits, postretirement or retiree welfare benefits, fringe benefits or other employee benefits or remuneration of any kind, whether or not subject to ERISA, whether written or unwritten, funded or unfunded, including each “employee benefit plan,” within the meaning of Section 3(3) of ERISA, that is sponsored by, or has been maintained, contributed to, or required to be sponsored, maintained or contributed to, by any of the Acquired Companies or any ERISA Affiliate for the benefit of any current or former employee, worker, independent contractor or director of any of the Acquired Companies or any of their Affiliates, or with respect to which any of the Acquired Companies or any ERISA Affiliate has or may have any liability or obligation.

“Business” means collectively the business of the Acquired Companies at the Completion Date.

“Business Day” means a day of the week other than a Saturday, Sunday or a day upon which banks are generally closed for business in London, United Kingdom or New York, New York, United States.

“Business Plan” means the NVM 3-Year Model dated 13 June 2018 and the Nimbus Operating Model in the agreed form.

“Buyer” has the meaning set forth in the Preamble.

“Cap” means $1.00.

“Claim” means a claim by the Buyer involving or relating to a breach of any Management Warranty or any other provision of this Deed.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commitment” means, with respect to a Person, (i) options, warrants, convertible securities, exchangeable securities, subscription rights, conversion rights, exchange rights or other agreements that could require such Person to issue any of its Equity Interests or to sell any Equity Interests it owns in another Person; and (ii) any other securities convertible into, exchangeable or exercisable for, or representing the right to subscribe for any Equity Interest of such Person.

“Company” has the meaning set forth in the Introduction.

3 “Company Business” means the business of the Acquired Companies as presently conducted as of the date hereof, including the design, development, manufacturing, distribution, sale, marketing, licensing, supply, and provision of the Company Offerings.

“Company Intellectual Property Rights” means any and all Intellectual Property Rights that are owned, used, held for use or practiced by any of the Acquired Companies, including any Intellectual Property Rights incorporated into or otherwise used, held for use or practiced in connection with any Company Offering.

“Company Offerings” means any and all products or services offered, licensed, provided, sold, distributed, made available or otherwise exploited by or for any of the Acquired Companies, and any and all products or services under design or development (or already designed or developed) by or for any of the Acquired Companies, including all versions and releases of the foregoing, together with any related documentation, materials, or information.

“Company Software” means all Software owned by or developed by or on behalf of any of the Acquired Companies.

“Company Stock Option Plans” means the Company’s EMI General Share Option Plan and the Company’s Unapproved Share Option Plan and any other standalone share option agreements.

“Company Stock Options” means any options to purchase Shares.

“Company Subsidiaries” means, collectively, NewVoiceMedia US Inc., NewVoiceMedia Pty Ltd, NewVoiceMedia Spółka z ograniczoną odpowiedzialnością, NewVoiceMedia Germany GmbH, NewVoiceMedia Euro Holdings S.à r.l., NVM Technology (Beijing) Limited Company, NewVoiceMedia UK Limited, NewVoiceMedia Asia Pacific Limited.

“Company Technology” means any and all Technology owned, used, held for use or practiced by any of the Acquired Companies, including any Technology incorporated into or otherwise used, held for use or practiced in connection with (or planned by any of the Acquired Companies to be incorporated into or otherwise used, held for use or practiced in connection with) any Company Offering.

“Completion” means the consummation of the transactions contemplated by the Offer on the First Closing Date.

“Completion Date” means the date on which Completion occurs.

“Confidential Information” has the meaning set forth in Clause 8.1.1.

“Contaminant” means any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” “corruptant,” “worm,” “malware,” “spyware,” or “trackware” (as such terms are commonly understood in the Software industry) or any other code designed, intended to, or that does have any of the following functions: (i) disrupting, disabling, harming or otherwise impeding in any manner the operation of, or providing unauthorized access to, any computer, tablet computer, handheld device or other device, or (ii) damaging or destroying any data or file without a user’s consent.

4 “Contracts” means all contracts, leases, subleases, deeds, mortgages, licenses, sublicenses, instruments, notes, commitments, undertakings, indentures, joint venture agreements and all other agreements and legally binding arrangements, whether written or oral, that pursuant to its respective terms, has not expired, terminated or been fully performed by the parties thereto.

“Contribution Notice” means a contribution notice issued by the Pensions Regulator under section 38 or 47 of the Pensions Act 2004.

“Control” means, as to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. The terms “Controlled by,” “under Common Control with” and “Controlling” shall have correlative meanings.

“Copyleft License” means any license of Software that provides, as a condition to the use, modification, or distribution of such licensed Software, that such licensed Software or any other Software that is incorporated into, derived from, based on, linked to, or used or distributed with such licensed Software, be licensed, distributed, or otherwise made available: (i) in a form other than binary or object code (e.g., in source code form); (ii) under terms that permit redistribution, reverse engineering, or creation of derivative works or other modification; or (iii) without a license fee. “Copyleft Licenses” include the GNU General Public License, the GNU Library General Public License, the GNU Lesser General Public License, the Affero General Public License, the Mozilla Public License, the Common Development and Distribution License, the Eclipse Public License, and all Creative Commons “sharealike” licenses.

“Copyrights” means copyrights, mask work rights and similar or equivalent rights (including neighbouring copyrights) with respect to Works of Authorship and Mask Works and all registrations of the foregoing and applications for the foregoing (including moral and economic rights, however denominated).

“CTA 2010” means the Corporation Tax Act 2010.

“Damages” means, collectively, any loss, liability, claim, damage, judgment, interest, award, penalty, fine, cost or expense of whatever kind (including any direct or indirect consequential losses, loss of profit and loss of reputation, reasonable and out-of- pocket attorneys’ fees), whether or not involving a Third‑Party Claim.

“Databases” means databases and other compilations and collections of data or information.

“Data Room” the Project Nimbus online data room hosted by Intralinks, Inc. as at 19.58 (London time) on 19 September 2018, the contents of which are listed in the index annexed to the Disclosure Letter and a copy of which shall promptly be delivered to the Buyer on DVD ROM together with confirmation from Intralinks that such DVD ROM contains the contents of the Data Room which could be viewed by the Buyer and its advisers as at 19.58 on 19 September 2018.

“Deed” has the meaning set forth in the Preamble.

5 “Defined Contribution Scheme” means the Standard Life Group Personal Pension Flex.

“Disclosed” means any fact, matter, event, circumstance or information which is fairly disclosed in sufficient detail as would enable a reasonably diligent buyer to understand its nature and scope.

“Disclosure Documents” means the bundle of documents annexed to the Disclosure Letter and listed in Annexure C thereto.

“Disclosure Letter” means the disclosure letter dated the date hereof, written and delivered by or on behalf of the Warrantors to the Buyer immediately before the signing of this Deed, including the Disclosure Documents.

“Dispute” has the meaning set forth in Clause 17.2.

“Dollars” or “$” means the lawful currency of the United States.

“Domain Names” means domain names, uniform resource locators and other names and locators associated with the Internet.

“Drag Closing Date” has the meaning given in the Offer Document.

“EMI Option” means an option granted under Schedule 5 (enterprise management incentives) to ITEPA 2003 held by employees of any Acquired Companies to acquire any shares in the capital of the Company.

“Encumbrance” means any lien (statutory or other), pledge, mortgage, deed of trust, security interest, charge, claim, easement, encroachment, community property interest, equitable interest, option, right of way, right of first refusal, or other similar encumbrance or restriction of any kind, including any restriction on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

“Environmental Laws” means all Laws relating to protection of the soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata and ambient air and biota living in or on such as in effect on the date hereof, as applicable to any of the Acquired Companies.

“Equity Interests” means (i) with respect to a corporation, any and all shares of capital stock and any Commitments with respect thereto, (ii) with respect to a partnership, limited liability company, trust or similar Person, any and all units, membership interests, other equity ownership interests or other partnership or limited liability company interests, including economic or profits interests, and any Commitments with respect thereto, and (iii) with respect to any other Person, any other equity ownership in such Person.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any entity that is considered a single employer with the Company under Section 4001(b) of ERISA, part of the same “controlled group” as the Company for purposes of

6 Section 302(d)(3) of ERISA or which together with the Company is treated as a single employer for purposes of Section 414(b), (c), (m) or (o) of the Code.

“Event” includes any act, omission, event or transaction and without limitation, the receipt or accrual of any income, profit or gains, the declaration, making or payment of any distribution, membership of or ceasing to be a member of any group or partnership or association, death, any residence or change in residence of any person for Tax purposes, the expiry of any period and Completion.

“FCPA” means the Foreign Corrupt Practices Act of 1977.

“FCPA Government Official” means (i) any official, officer, employee, or representative of, or any Person acting in an official capacity for or on behalf of, any FCPA Governmental Authority, (ii) any political party official or candidate for political office or (iii) any company, business, enterprise or other entity owned or controlled by any Person described in the foregoing clauses (i) or (ii).

“FCPA Governmental Authority” means (i) any Governmental Body, (ii) any public international organization (such as the World Bank, the European Union, the United Nations Educational, Scientific, and Cultural Organization, or the World Intellectual Property Organization), (iii) any agency, division, bureau, department, or other political subdivision of any government, entity or organization described in the foregoing clauses (i) or (ii), (iv) any company, business, enterprise, or other entity owned or controlled by any government, entity, or organization described in the foregoing clauses (i), (ii) or (iii), or (v) any political party.

“Financial Support Direction” means a financial support direction issued by the Pensions Regulator under section 43 of the Pensions Act 2004.

“First Closing Amount” has the meaning set forth in Clause 5.1.1.

“First Closing Date” has the meaning given in the Offer Document.

“Fundamental Warranties” means, collectively, the Management Warranties set forth in paragraph 1 of Schedule 1 (Authority of the Warrantors), and paragraphs 2.1.1, 2.1.4, 2.2.1, 2.2.2, 2.2.3, 2.2.4, 2.2.5, 2.3.1, 2.3.2, 2.3.6, 2.3.8 and 2.3.9 of Schedule 1, (Organization, Shares and Subsidiaries).

“Governing Documents” means (i) in the case of a Person that is a corporation, its articles or certificate of incorporation and its by-laws, regulations or similar governing instruments required by the Laws of its jurisdiction of formation or organization, (ii) in the case of a Person that is a partnership, its articles or certificate of partnership, formation or association, and its partnership agreement (in each case, limited, limited liability, general or otherwise), (iii) in the case of a Person that is a limited liability company, its articles or certificate of formation or organization, and its limited liability company agreement or operating agreement, and (iv) in the case of a Person that is none of a corporation, partnership (limited, limited liability, general or otherwise), limited liability company or natural person, its governing instruments as required or contemplated by the Laws of its jurisdiction of organization.

7 “Governmental Body” means the government of the Commonwealth of Australia, the Federal Republic of Germany, the Grand Duchy of Luxembourg, the Republic of Poland, the United Kingdom, the United States of America, or any other country and any state, province, commonwealth, territory, possession, county, municipality or other subdivision thereof, or any entity, authority, agency, instrumentality, ministry or other similar body exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining to government, including, in all cases, any authority or other quasi-governmental entity established to perform any of such functions, or any arbitrator, court or tribunal.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Body.

“Grant Date” has the meaning set forth in paragraph 2.2.11 of Schedule 1.

“Hazardous Material” means any pollutant, toxic substance, hazardous waste, hazardous materials, hazardous substances, petroleum or petroleum-containing products as defined in, or listed under, any Environmental Law.

“HSR Act” has the meaning given in the Offer Document.

“HSR Condition” means the condition set out in the Offer Document in relation to the expiration or termination of the waiting period (and any extension thereof) applicable to the consummation of the Offer under the HSR Act.

“IFRS” means International Financial Reporting Standards as adopted by the European Union.

“Indebtedness” means (i) all obligations for borrowed money, (ii) all obligations evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (iii) all obligations under conditional sale or other title retention agreements relating to property purchased (other than customary reservations or retentions of title under agreements with suppliers entered into in the Ordinary Course of Business), (iv) all obligations issued or assumed as the deferred purchase price of property or services purchased which would appear as liabilities on a balance sheet under UK GAAP, (v) all obligations under take- or-pay or similar arrangements or under commodities agreements, (vi) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Encumbrance on, or payable out of the proceeds of production from, property owned or acquired by the Acquired Companies, whether or not the obligations secured thereby have been assumed; provided that for purposes hereof, the amount of such Indebtedness shall be limited to the greater of (a) the amount of such Indebtedness as to which there is recourse to the Acquired Companies and (b) the fair market value of the property which is subject to the Encumbrance, (vii) all guarantees with respect to Indebtedness of another Person, (viii) the attributable indebtedness under UK GAAP with respect to capital leases and synthetic lease obligations, (ix) the maximum amount of all standby letters of credit issued or bankers’ acceptances facilities created for the account of the Acquired Companies and, without duplication, all unreimbursed drafts drawn thereunder (less the amount of any cash collateral securing any such letters of credit or and bankers’ acceptances), (x) the outstanding attributed principal amount under any asset securitization program, including, without

8 limitation, any notes or accounts receivable financing program, (xi) all cash obligations which arise in connection with any forward equity transactions which are treated as borrower money indebtedness in accordance with UK GAAP and (xii) the Indebtedness of any partnership or unincorporated joint venture in which any of the Acquired Companies is a general partner or a joint venturer to the extent such Indebtedness is recourse to such Acquired Companies. For purposes of this Deed, “Indebtedness” means the Indebtedness of the Company on a consolidated basis including, for avoidance of doubt, all Indebtedness of any Company Subsidiary.

“Intellectual Property License” means any license, sublicense, right, covenant, non-assertion, permission, immunity, consent, release or waiver under or with respect to any Intellectual Property Rights or Technology.

“Intellectual Property Rights” means any and all rights in intellectual property and/or industrial property (anywhere in the world, whether statutory, common law or otherwise), including: (i) Patents; (ii) Copyrights; (iii) other intellectual property rights with respect to Software and Technology, including registrations of these rights and applications to register these rights; (iv) industrial design rights and registrations of these rights and applications to register these rights; (v) rights with respect to Marks, and all registrations for Marks and applications to register Marks; (vi) rights with respect to Domain Names, including registrations for Domain Names; (vii) rights with respect to Proprietary Information, including rights to limit the use or disclosure of Proprietary Information by any Person; (viii) rights with respect to Databases, including registrations of these rights and applications to register these rights; (ix) rights of publicity and personality, including all rights with respect to use of a Person’s name, signature, likeness, image, photograph, voice, identity, personality, and biographical and personal information and materials; (x) renewals, reissues, reversions, reexaminations, continuations, continuations-in-part or extensions of any of the foregoing; and (xi) any rights equivalent or similar to any of the foregoing.

“Insurance Policies” has the meaning set forth in paragraph 14.1 of Schedule 1.

“Invention Assignment Agreement” has the meaning set forth in paragraph 10.11 of Schedule 1.

“IRS” means the United States Internal Revenue Service.

“IT Systems” means all computer systems, servers, network equipment and other computer hardware owned, operated, leased or licensed by any of the Acquired Companies and otherwise used in the conduct of the Company Business.

“ITEPA 2003” means the Income Tax (Earnings & Pensions) Act 2003.

“Key Employee” means Dennis Fois, Guy Sochovsky, Artur Michalczyk, Moni Manor and Fiona Talbot.

“Knowledge of the Warrantors” or “Warrantors’ Knowledge” or any other similar knowledge qualification means (i) the actual knowledge of the Warrantors; and (ii) the knowledge that any of the foregoing Persons would acquire as a result of reasonable inquiry of each other Warrantor and

9 Andreas Happel, Carol Hopperton and Wyndham Hudson, and shall be deemed to include any written notice received by any of the foregoing Persons as to the applicable matter.

“Lapse Date” has the meaning given in the Offer Document.

“Laws” means any laws, statutes, codes, executive orders, licensing requirements, ordinances and any rule or regulation of any competent Governmental Body, including any Governmental Order having the effect of law.

“Leakage” has the meaning set forth in the Offer Document.

“Lease” has the meaning set forth in paragraph 21.2 of Schedule 1.

“Leased Real Property” has the meaning set forth in paragraph 21.2 of Schedule 1.

“Liabilities” has the meaning set forth in paragraph 4.3 of Schedule 1.

“Licensed IP” has the meaning set forth in paragraph 10.3 of Schedule 1.

“Locked Box Accounts” means the locked box accounts for the period ended on the Locked Box Date in the agreed form.

“Locked Box Date” means 31 July 2018.

“Management Accounts” means the monthly management accounts of the Company and the Company Subsidiaries for the period from the Accounts Date to the Locked Box Date.

“Management Warranty” means a statement contained in Schedule 1.

“Marks” means trademarks, service marks, logos and design marks, trade dress, trade names, fictitious and other business names, and brand names, together with all goodwill associated with any of the foregoing.

“Mask Works” means mask works, layouts, topographies and other design features with respect to integrated circuits.

“Material Adverse Effect” means any event or occurrence that is, or could reasonably be expected to become individually or in the aggregate, materially adverse to (i) the business, financial conditions or trading position of the Acquired Companies taken as a whole; or (ii) the value or state of assets or amount or nature of liabilities of the Acquired Companies taken as a whole as compared with the position disclosed in the Accounts; provided, however, that “Material Adverse Effect” shall not include any event or occurrence to the extent arising out of or attributable to: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Acquired Companies operate; (iii) any changes in financial or securities markets in general; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening of any of the foregoing; (v) any changes in accounting rules, including IFRS or UK GAAP; and (vi) any action permitted by a prior written consent or waiver or direction executed and delivered by the

10 Buyer, except pursuant to or in connection with paragraph 3 of Schedule 1 and provided, further, that any event or occurrence referred to in clauses (i) through (v) immediately above shall be taken into account in determining whether a Material Adverse Effect has occurred or could reasonably be expected to occur to the extent that such event or occurrence has a materially disproportionate effect on the Acquired Companies compared to other participants in the industries in which the Acquired Companies conduct their respective businesses.

“Material Client” has the meaning set forth in paragraph 16.1 of Schedule 1.

“Material Contract” has the meaning set forth in paragraph 15.2 of Schedule 1.

“Material Supplier” has the meaning set forth in paragraph 16.2 of Schedule 1.

“Non-Negotiated Vendor Contract” means a Contract that meets all of the following conditions: (i) such Contract grants to the Acquired Companies a non-exclusive license to download or use generally commercially available, non-customized Software or a non-exclusive right to access and use the functionality of such Software on a hosted or “software-as-a-service” basis (and does not include any Intellectual Property Licenses granted by the Acquired Companies); (ii) such Contract is a non-negotiable “shrink- wrap” or “click-through” Contract; (iii) the Software is not included, incorporated or embedded in, linked to, combined or distributed with, or used in the development, design, delivery, distribution or provision of, any Company Software or Company Offering; and (iv) such Contract is not a license for Open Source Software.

“Non-U.S. Benefit Plan” means each Benefit Plan that is maintained by an Acquired Company primarily in respect of any past or current employees, contractors, or directors of the Acquired Companies who are located outside of the United States, to whom obligations under such Benefit Plan is or may be owed.

“Notice” has the meaning set forth in Clause 12.1.

“OFAC” means the Office of Foreign Assets Control of the U.S. Treasury Department.

“OFAC Sanctioned Countries” means any country or territory subject to comprehensive U.S. sanctions, currently Cuba, Iran, North Korea, Sudan, Syria, and the Crimea region of Ukraine.

“Offer” has the meaning set forth in the Introduction.

“Offer Document” means the recommended offer dated on the date hereof from the Buyer to the Shareholders and any completed and signed forms of acceptance relating thereto.

“Open Source Software” means any Software that is subject to or licensed, provided or distributed under any open source license (including any Copyleft License), including any license meeting the Open Source Definition (as promulgated by the Open Source Initiative) or the Free Software Definition (as promulgated by the Free Software Foundation), or any substantially similar license.

“Ordinary Course of Business” means, with respect to the Acquired Companies, the ordinary course of their respective businesses consistent with past practice.

11 “Other Shareholder” means all persons who own Shares other than the Warrantors.

“Owned Company IP” has the meaning set forth in paragraph 10.3 of Schedule 1.

“Party” means a party to this Deed and includes a reference to that party’s successors and permitted assigns.

“Patents” means patents and patent applications, utility models and applications for utility models, inventor’s certificates and applications for inventor’s certificates, and invention disclosure statements.

“PCI DSS” has the meaning set forth in paragraph 12.1 of Schedule 1.

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances, letters, clearances, consents, waivers, exemptions, decisions, other actions and similar rights obtained, or required to be obtained, from Governmental Bodies.

“Permitted Encumbrances” means, collectively, (i) encumbrances disclosed in the Locked Box Accounts, (ii) encumbrances for Taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty or are being contested in good faith (and for which, in each case, appropriate reserves have been established in accordance with UK GAAP), (iii) encumbrances for carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other similar encumbrances arising in the Ordinary Course of Business, (iv) encumbrances consisting of pledges or deposits required in the Ordinary Course of Business in connection with workers’ compensation, unemployment insurance and other social security legislation or to secure liability to insurance carriers, (v) encumbrances on any real or tangible property acquired or held by the Acquired Companies in the Ordinary Course of Business, securing Indebtedness incurred or assumed for the purpose of financing (or refinancing) all or any part of the cost of acquiring such real or tangible property, (vi) encumbrances on real or tangible property securing capital lease obligations, (vii) any interest or title of a lessor or sublessor, as lessor or sublessor, under any real or tangible property lease and any precautionary uniform commercial code financing statements filed under any real or tangible property lease and (viii) non-exclusive licenses under Intellectual Property Rights and (ix) encumbrances of record or imperfections of title which are not material in character, amount or extent and which do not materially detract from the value or materially interfere with the present use of the assets subject thereto or affected thereby.

“Permitted Leakage” has the meaning set forth in the Offer Document.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or Governmental Body.

“Personal Information” means, in addition to all information defined or described by any of the Acquired Companies as “personal information,” “personally identifiable information,” “PII,” or using any similar term in any of the Acquired Companies’ privacy policies or other public-facing statement, all information associated with an identified or identifiable individual person or device (including name, physical address, telephone number, email address, financial account number,

12 government-issued identifier (including Social Security number, personal account number, and driver’s license number), genetic, medical, health or insurance information, gender, date of birth, educational or employment information, religious or political views or affiliations, marital or other status, photograph, video recording, audio recording, face geometry, or biometric information, online identifier, and any other data used or intended to be used to identify, contact or precisely locate an individual or device). Personal Information may relate to any individual, including users of the Acquired Companies’ websites and applications, users of the Company Offerings, or a current, prospective or former customer, employee or vendor of any Person. Personal Information includes information in any form, including paper, electronic and other forms.

“Privacy Policy” has the meaning set forth in paragraph 12.1 of Schedule 1.

“Proceedings” has the meaning set forth in Clause 17.4.

“Prohibited Person” means (i) a Person who has been designated by the U.S. Government under 31 C.F.R. Chapter V or any other Law administered by OFAC or who is on the OFAC List of Specially Designated Nationals and Blocked Persons (“SDNs”); (ii) the government of an OFAC Sanctioned Country or any resident thereof; or (iii) a Person acting or purporting to act, directly or indirectly, on behalf of, or a legal entity owned or controlled by, any of the Persons identified in any of the foregoing subparagraphs (i) or (ii).

“Proprietary Information” means information and materials not generally known to the public, including trade secrets and other confidential and proprietary information.

“Protected Data” has the meaning set forth in paragraph 12.2 of Schedule 1.

“Receiving Agent” means Computershare Investor Services PLC.

“Registered Company Intellectual Property Rights” means (i) all issued Patents, pending Patent applications, Mark registrations, applications for Mark registrations, Copyright registrations, applications for Copyright registrations and Domain Name registrations owned, filed or applied for by or on behalf of any of the Acquired Companies, and (ii) any other applications, registrations, recordings and filings filed by or on behalf of any of the Acquired Companies (or otherwise authorized by or in the name of any of the Acquired Companies) with respect to any Company Intellectual Property Rights.

“Related Party Contract” has the meaning set forth in paragraph 17 of Schedule 1.

“Release” means any releasing, disposing, discharging, injecting, spilling, leaking, pumping, dumping, emitting, escaping or emptying of a Hazardous Material into the soil, surface waters, groundwater, land, stream sediments, surface or subsurface strata and ambient air and biota living in or on such media.

“Relief” includes any right to repayment of Tax and any relief, loss, allowance, set-off or credit in respect of Tax and any deduction in computing, or against, profits for Tax purposes;

13 “Representative” means, with respect to any Person, such Person’s directors, officers, shareholders, members, managing members, general or limited partners, managers, employees, consultants, financial advisors, counsel, accountants and other agents and representatives of such Person.

“Resigning Directors” has the meaning given in Clause 5.2.1.

“Restricted Business” means any business whose principal business or operations comprises a cloud based contact centre as a service in the United Kingdom, USA, European Union and/or the member states of the European Free Trade Association as at the date of this Deed.

“Restricted Period” means a period of 24 months from the Completion Date provided that, if a Warrantor other than Dennis Fois and Guy Sochovsky is dismissed or has notice of termination of their employment or engagement served on them by an Acquired Company after the Completion Date (other than in circumstances justifying summary dismissal), such period shall be 12 months from the Completion Date.

“Sanctions” means any trade sanction or economic embargo administered or enforced by the United States Government (including OFAC), the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

“Sanctions and Export Laws” means all Laws relating to Sanctions and to the export and re‑export of goods, services, software or technology, which are applicable to any Acquired Company.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated under such Law.

“Security Practices” has the meaning set forth in paragraph 12.2 of Schedule 1.

“Shareholder” means the holders of Shares immediately prior to Completion.

“Shares” has the meaning set forth in the Introduction.

“Software” means all (i) computer programs, including all software implementations of algorithms, models and methodologies, whether in source code or object code, (ii) Databases, (iii) descriptions, flow-charts and other work product used to design, plan, organize and develop any of the foregoing, screens, user interfaces, report formats, firmware, development tools, templates, menus, buttons and icons and (iv) documentation, including user manuals and other training documentation, related to any of the foregoing.

“Standard Form Customer Contracts” means non-exclusive grants of Intellectual Property Licenses to customers of the Acquired Companies entered into in the Ordinary Course of Business.

“Subsidiary” means “subsidiary” as defined in section 1159 of the Companies Act 2006.

“SVB” means Silicon Valley Bank.

14 “SVB Bank Debt” means the indebtedness of each Acquired Company under the SVB Facilities (and any documents referred to therein) together with accrued interest up to the First Closing Date and any break costs, redemption premium or penalty arising as a result of repayment at the First Closing Date or otherwise due and payable in respect thereof.

“SVB Facilities” means the up to USD12,500,000 revolving loan facility, dated 21 December 2017, between, amongst others, SVB (as lender), the Company and NewVoiceMedia US Inc (as original borrowers) (as amended or restated from time to time).

“Tax Authority” means any local, municipal, governmental, state, federal or fiscal, revenue, customs or excise authority, body, agency or official anywhere in the world competent to impose a liability to Tax.

“Tax Deed” means the tax deed relating to the sale of all the Shares in the Company to be entered into between Guy Sochovsky and Fiona Talbot and the Buyer on the date hereof.

“Tax Returns” means any report, return, election, declaration, claim for refund, information return or other document or filing (including any schedule or attachment thereto and including any amendment thereof) filed or required to be filed with any Tax Authority, or maintained or required to be maintained by any Person, with respect to Taxes.

“Taxes” means all forms of taxation, duties, levies, imposts, whether of the United Kingdom or any other jurisdiction including corporation tax, including instalment payments in respect thereof, income tax, capital gains tax, value added tax, duties of excise, customs and other import duties, inheritance tax, stamp duty, stamp duty reserve tax, stamp duty land tax, capital duties, national insurance contribution, charges, fees, levies or other assessments in the nature of a tax of any kind whatsoever, imposed by any Tax Authority, together with any interest, fines, penalties or additional amounts attributable to, or imposed upon, or with respect to, any such taxes, charges, fees, levies or other assessments in the nature of a tax.

“Technology” means, collectively, all: (i) Software, information, designs, formulae, algorithms, procedures, methods, techniques, ideas, know-how, research and development, technical data, programs, subroutines, tools, materials, specifications, processes, inventions, discoveries, and improvements (whether patentable or unpatentable and whether or not reduced to practice), apparatus, creations, and all recordings, graphs, drawings, reports, analyses and other writings; (ii) technical, engineering, manufacturing, product, marketing, servicing, business, financial, supplier, personnel and other information and materials; (iii) industrial designs, models, devices, prototypes, schematics and development tools; and (iv) other tangible embodiments of any of the foregoing, in any form or media whether or not specifically listed herein, and all related technology, that are used in, incorporated in or embodied in any of the foregoing.

“Third-Party Claim” has the meaning set forth in paragraph 4.1 of Schedule 2.

“Third-Party Debts” means any Indebtedness owed by any Acquired Company to any Person other than another Acquired Company.

15 “UK GAAP” means United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”).

“Union” means any union, works council or labor organization.

"US Benefit Plan" means each Benefit Plan that is maintained by an Acquired Company primarily in respect of any past or current employees, contractors or directors of the Acquires Companies who are located in the United States, to whom obligations under such Benefit Plan are or may be owed.

“VATA” means the Value Added Taxes Act 1994.

“W&I Insurance Policy” means the buyer-side warranty and indemnity insurance policy to be obtained by the Buyer.

“WARN” has the meaning set forth in paragraph 18.6 of Schedule 1.

“Warrantors” has the meaning set forth in the Preamble.

“Warrantor Affiliates” means a person connected with a Warrantor within the meaning of section 1122 of the CTA 2010.

“Warrantors’ Representative” has the meaning set forth in paragraph 11.1 of Schedule 2.

“Warranty Claim” means a claim by the Buyer involving or relating to a breach of any Management Warranty.

“Works of Authorship” means computer programs, websites, content, images, logos, graphics, text, photographs, artwork, audiovisual works, sound recordings, graphs, drawings, reports, analyses, writings, and other works of authorship and copyrightable subject matter.

2. EFFECT

2.1 Other than Clauses 3.1 to 3.7, 5.1 and 8 (which shall be effective immediately on and from the date of this Deed), this Deed shall only become effective upon, and subject to, Completion having occurred. If the Offer is terminated or rescinded or lapses for any reason, then this Deed shall automatically and immediately terminate and cease to be of any effect whatsoever (other than in respect of any previously accrued rights under Clauses 3.2 to 3.7, 5.1 and 8).

2.2 If Completion does not take place by the Lapse Date, this Deed shall immediately terminate and cease to have effect and the Warrantors and the Company shall have no liability under or in connection with this Deed (other than in respect of any previously accrued rights under Clauses 3.2 to 3.7, 5.1 and 8).

3. PRE-COMPLETION OBLIGATIONS

16 Conduct of business pending Completion

3.1 From the date of this Deed until Completion the Company and each of the Warrantors shall comply with the obligations set out in Schedule 3.

Offer

3.2 The Buyer hereby irrevocably undertakes:

3.2.1 to send the Offer Document to the Warrantors, Other Shareholders and holders of options under the Company Stock Option Plans within three (3) Business Days of the date of this Deed;

3.2.2 not to terminate, rescind, revoke or withdraw the Offer pursuant to the Offer Document, unless it lapses on the Lapse Date in accordance with its terms; and

3.2.3 not to (and will procure that none of its Affiliates shall) transfer any Shares in the period before the First Closing Date and the Drag Closing Date.

HSR Condition

3.3 The Company shall (and shall procure that the Acquired Group shall) at its own cost:

3.3.1 file a Notification and Report Form as required to be made by the Acquired Companies in connection with the satisfaction of the HSR Condition (in consultation with the Buyer), as soon as possible (and, in any event, within 10 Business Days) after the date of this Deed;

3.3.2 promptly supply to: (i) the relevant authority, where requested or required; and/or (ii) the Buyer, to the extent reasonably requested by the Buyer, all information in respect of the Acquired Companies necessary for making any notifications, filings and other communications in respect of the HSR Condition (or responding to any request for further information consequent upon such notifications, filings and communications); and

3.3.3 procure that all information supplied in accordance with Clause 3.3.2 above, is complete and accurate in all material respects.

3.4 The Buyer undertakes to the Company that it shall (and shall procure that its Affiliates shall) at its own cost (including the cost of filing fees incurred):

3.4.1 File a Notification and Report Form as required to be made by the Buyer in connection with the satisfaction of the HSR Condition (in consultation with the Company), as soon as possible (and, in any event, within 10 Business Days) after the date of this Deed; and

17 3.4.2 use its reasonable endeavours to procure that the HSR Condition is fulfilled after the date of this Deed and in any event before the Lapse Date, including by promptly supplying all information required or requested by any relevant authority or under applicable laws and regulations; and

3.4.3 promptly notify the Company, and provide copies, of any communications from any Governmental Body relating to the HSR Condition, to the extent not prohibited by any Governmental Body.

3.5 The Buyer shall provide the Company (or its advisors) with:

3.5.1 draft copies of all notifications, filings and other communications to be sent to any Governmental Body in relation to the HSR Condition at such time as will allow the Company a reasonable opportunity to provide comments (any such reasonable comments to be considered before the relevant notification, filing or communication is sent to the relevant Governmental Body);

3.5.2 copies of all such notifications, filings and other communications in the form submitted or sent to and copies of all communications received from any Governmental Body in relation to the HSR Condition, to the extent not prohibited by any Governmental Body and excluding any information covered by any privilege,

provided however that the Buyer shall not be required under Clauses 3.5.1 or 3.5.2 above to provide the Company with copies of any element of such notifications, filings and other communications which contains information of a commercially sensitive nature with regard to the Buyer or its Affiliates without first redacting that element; and

3.5.3 access to advisors appointed by the Buyer to work with the Company and its advisors in connection with all matters relating to the satisfaction of the HSR Condition;

3.5.4 sufficient advance notice of any meetings or calls with any Governmental Body or regulatory authority in connection with the HSR Condition, to the extent not prohibited by any Governmental Body; and

3.5.5 where permitted by the relevant Governmental Body or regulatory authority, the opportunity to have persons nominated by the Company to attend all meetings and calls with any Governmental Body in connection with the HSR Conditions and, where appropriate, to make oral submissions at such meetings or calls provided however that the Buyer shall not be required to permit persons nominated by the Company to attend any part of such meetings or calls during which information of a commercially sensitive or privileged nature with regard to the Buyer or its Affiliates is likely to be disclosed.

3.6 The Buyer shall notify the Company in writing promptly, and no later than one (1) Business Day, after:

18 3.6.1 the HSR Condition has been fulfilled; or

3.6.2 the HSR Condition ceases to be capable of being fulfilled on or before 3 p.m. London Time on the Lapse Date or the Buyer has reasonable grounds to believe this to be the case.

Parachute Payments

3.7 In relation to certain amounts, that would be characterized as an “excess parachute payment” (as defined in Section 280G(b) (1) of the Code) (the “Parachute Payments”) payable in connection with the Offer to certain executives of the Acquired Companies who are identified after the date of this Deed by the Company as “disqualified individuals” (within the meaning of Section 280G of the Code and related regulations) receiving Parachute Payments (the “Relevant Executives”), the Company and the Warrantors shall use reasonable endeavours to:

3.7.1 prior to sending notices to Shareholders in relation to the Payment Approval (defined below), obtain a waiver from the Relevant Executives of the right to receive the Parachute Payments pending receipt of the Payment Approval; and

3.7.2 at least five (5) days prior to the Completion Date, obtain the approval (the “Payment Approval”) of more than 75% of the voting Shares (not taking into account the votes on Shares held by the Relevant Executives) with the effect of rendering the parachute payment provisions of Section 280G of the Code inapplicable to the Parachute Payments, with such shareholder approval to be solicited in a manner which satisfies all applicable requirements of such Section 280G(b)(5)(B) of the Code and the Treasury Regulations thereunder.

4. MANAGEMENT WARRANTIES

4.1 Each Warrantor, severally (and not jointly or jointly and severally) warrants to the Buyer that each Management Warranty set forth in this Deed is true and accurate as at the date of this Deed and as of the Completion Date.

4.2 Each Management Warranty is given subject to, and is qualified by, the matters Disclosed in the Disclosure Letter and the limitations and exclusions expressly provided for in this Deed.

4.3 Each Management Warranty set out in the first column of the table below shall be given subject to, and is qualified by, the matters Disclosed in the Data Room folders specified adjacent thereto (and the subfolders of such folders).

19 Management Warranties Data Room folders

3 (Consents) 5.0 (Commercial Contracts)

4 (Accounts) and 5 (Management Accounts) 2.0 (Financial Information)

8 (Tax) 4.0 (Tax), 9.5 (Options)

9 (Assets) 6.0 (Assets)

10 (Intellectual Property) and 11 (IT Systems) 8.0 (Intellectual Property and Information Technology)

12 (Data Protection) 13.1 (Data Protection)

14 (Insurance) 7.0 (Insurance)

15 (Material Contracts), 16 (Key Relationships), 17 5.0 (Commercial Contracts), 8.0 (Intellectual Property (Related Party Transactions) and Information Technology)

18 (Employees) 9.0 (Employment)

19 (Employee Benefits) 9.5 (Options), 9.9 (Employee Benefits)

20 (Pensions) 10.0 (Pensions)

21 (Real Property) 11.0 (Real Estate)

23 (Compliance with Law), 24 (Anti-Money 13.0 (Regulatory Matters and Compliance) Laundering Laws and Sanctions and Export Compliance), 25 (Anti-Corruptions Laws; Certain Regulatory Matters)

4.4 Each Warrantor’s liability for Claims shall be limited or excluded, as the case may be, as set out in Schedule 2.

4.5 No warranty, express or implied, is given by any Warrantor whatsoever in respect of any budget, forecast or other projection of any nature made or supplied by or on behalf of any Person.

4.6 The Buyer undertakes to each of the Warrantors, and to each of the other persons mentioned below, each of whom may enforce this Clause 4.6 subject to and in accordance with the Act not (except in the case of fraud or willful misconduct) to initiate or pursue (either directly or through any other person including without limitation any Acquired Company) proceedings of any kind against any present or former director, officer, employee or partner of any Acquired Company (other than any of the Warrantors (but then strictly in accordance with the terms of this Deed)) or the Shareholders (other than in accordance with the Offer

20 Document) in respect of any conduct, default or omission of any such person prior to Completion or in respect of any warranty, representation or statement made to the Buyer (or any Affiliate of the Buyer, or any of their respective representatives and/or advisers) or any Acquired Company, or in relation to the Disclosure Letter, in each case in connection with the Offer.

4.7 The Buyer shall ensure that the W&I Insurance Policy includes an express waiver of any rights of subrogation against any Warrantor (except in the case of fraud or willful misrepresentation by a Warrantor, in which case such waiver shall cease to apply in respect of the relevant fact, matter, or circumstance in respect of that Warrantor only).

4.8 Except in the case of fraud or willful misrepresentation by a Warrantor, the Buyer shall indemnify and hold harmless each Warrantor for, and will pay to such Warrantor on demand, on a dollar for dollar basis, the amount of any Damages arising from or in connection with any insurer’s right of subrogation with the W&I Insurance Policy.

5. COMPLETION AND FIRST CLOSING DATE

5.1 The Buyer:

5.1.1 shall pay the consideration required to be paid to the Warrantors and the Other Shareholders pursuant to the terms of the Offer Document to the Receiving Agent on or prior to the First Closing Date (the “First Closing Amount”);

5.1.2 shall upon such payment provide notice and evidence to the Company of such payment; and

5.1.3 undertakes not, directly or indirectly, to withdraw, extract or cause to be repaid the First Closing Amount from the Receiving Agent, other than to settle the consideration amounts payable to the Warrantors and the Other Shareholders pursuant to the terms of the Offer Document.

5.2 On the First Closing Date:

5.2.1 the Company shall deliver to the Buyer or procure the delivery to the Buyer of:

(1) a director resignation letter in the agreed form duly executed by each of Mark Farmer, Alex Ferrara, Laurence Garrett and Christopher Tottman (each, a “Resigning Director”); and (2) duly executed board resolutions of the Company accepting the resignation from the board of the Company of each of the Resigning Directors, pending the First Closing Date.

5.2.2 the Company shall procure that each applicable Acquired Company discharges all of its liabilities in respect of the SVB Bank Debt including releasing any existing security interests in connection with the SVB Bank Debt by way of a payment by

21 electronic transfer of immediately available funds to SVB of an amount equal to the outstanding amount of SVB Bank Debt.

6. POST COMPLETION UNDERTAKINGS

Restrictions on the Warrantors

6.1 During the Restricted Period, each Warrantor shall not, directly or indirectly:

6.1.1 engage in or assist others in engaging in the Restricted Business;

6.1.2 have an interest in any Person that engages directly or indirectly in the Restricted Business in any capacity, including as a partner, shareholder, member, lender, investor, employee, director, manager, principal, agent, trustee or consultant; or

6.1.3 intentionally interfere with the business relationships (whether formed prior to or after the date of this Deed) between the Acquired Companies and the customers of the Acquired Companies.

Notwithstanding the foregoing, the Warrantors and its Affiliates may own, directly or indirectly, solely as an investment, securities of any Person traded on any public securities exchange if none of the Warrantors or its Affiliates is a controlling Person of such Person and does not, directly or indirectly, own five percent (5%) or more of any class of securities of such Person.

6.2 During the Restricted Period, each Warrantor shall not directly or indirectly:

6.2.1 hire or solicit any Person who is an officer or employee of the Acquired Companies engaged in skilled or managerial work;

6.2.2 encourage any such Person to leave or terminate such employment; or

6.2.3 hire any such employee who has left or terminated such employment;

provided, that nothing in this Clause 6.2 shall prevent a Warrantor or its Affiliates from hiring (i) any employee, whose employment has been terminated by the Acquired Companies or the Buyer or (ii) after ninety (90) days from the date of termination of employment, any employee, whose employment has been terminated by the employee; or (iii) pursuant to a general solicitation which is not directed specifically to any such Persons.

6.3 During the Restricted Period, each Warrantor shall not directly or indirectly, solicit or entice, or attempt to solicit or entice, any customer of the Acquired Companies, or potential customer of the Acquired Companies for the purposes of diverting their business or services from the Acquired Companies.

6.4 Each Warrantor acknowledges that a breach or threatened breach of this Clause 6 could give rise to irreparable harm to the Buyer, for which monetary damages would not be an adequate

22 remedy, and hereby agrees that in the event of a breach or a threatened breach by such Warrantor of any such obligations, the Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to seek equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction.

6.5 Each Warrantor acknowledges that the restrictions contained in this Clause 6 are reasonable and necessary to protect the legitimate interests of the Buyer and constitute a material inducement to the Buyer to enter into this Deed and conduct the Offer.

6.6 In the event that any covenant contained in this Clause 6 should ever be adjudicated to exceed the time, geographic, product or service, or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service, or other limitations permitted by applicable Law (and the Buyer and Warrantors shall negotiate in good faith to make such modification as is required to make the restriction valid and effective).

6.7 The covenants contained in this Clause 6 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction.

6.8 The undertakings in this Clause 6 are intended for the benefit of the Buyer (including the Acquired Companies after Completion) and apply to actions carried out by a Warrantor in any capacity whatsoever (other than in the proper performance of such Warrantor’s duties as a director, officer or employee of any Acquired Company) and whether directly or indirectly, on his own, on behalf of any other Person, by any other Person on such Warrantor’s behalf or jointly with any other Person and whether as principal, shareholder, manager, employee, partner, director, investor, contractor, consultant, agent or otherwise.

Resigning Directors

6.9 Following the First Closing Date, the Buyer shall ensure that any indemnity and/or immunity provisions contained in the articles of association (or similar constitutional documents) of each Acquired Company of which a Resigning Director was a director immediately prior to the First Closing Date are not amended, repealed or modified in any manner that would affect adversely the rights of any Resigning Director and that the Resigning Directors retain the benefit of such indemnity and/or immunity provisions to the extent that the same are enforceable.

6.10 The Buyer shall, and shall procure that each Acquired Company shall, to the fullest extent permitted in accordance with applicable laws, waive, release and discharge each of the Resigning Directors from any and all claims, demands, proceedings, causes of action, orders, obligations and liabilities arising out of any event occurring on or before the First Closing

23 Date (each, a “Pre-Completion Event”) which each Acquired Company has or may at any time have had against any of the Resigning Directors, save in the case of fraud by the relevant Resigning Director. The Buyer shall not, and shall procure that each Acquired Company shall not, directly or indirectly, assert any claim or demand, or commence, institute or cause to be commenced, any proceedings of any kind relating to any Pre-Completion Event against any Resigning Director, save in the case of fraud by the relevant Resigning Director.

6.11 Following the First Closing Date, if any person alleges that any Resigning Director has breached the duty he or she owes or owed to any Acquired Company in his or her capacity as a director prior to the First Closing Date, the Buyer shall, and shall procure that each Acquired Company shall, in each case to the fullest extent permitted by law, vote in favour of a resolution ratifying any act and/or omission of such director which it is alleged constitutes a breach of duty.

7. PRESERVATION OF INFORMATION

7.1 The Buyer shall, and following Completion shall cause the Acquired Companies to, until the sixth (6th) anniversary of the Completion Date, use reasonable endeavours to retain all books, records and other documents pertaining to the business of the Acquired Companies relating to periods prior to the Completion Date, and make the same available for inspection and copying by each Warrantor, Other Shareholder and their respective Affiliates and its and their officers, directors, employees or professional advisers, at the expense of the Warrantor or Other Shareholder (as applicable), during the normal business hours of the Buyer and the Acquired Companies upon reasonable request and upon reasonable notice, as the applicable Warrantor, Other Shareholder or their respective Affiliates may reasonably require:

(a) to enable the relevant person to prepare their respective statutory or management accounts; or

(b) for any other accounting purpose or other purpose relating to Taxes required by applicable law, regulation, governmental or regulatory authority or the rules of any stock exchange to which they are subject.

7.2 Each Warrantor shall until the sixth (6th) anniversary of the Completion Date use reasonable endeavours to retain all books, records and other documents of such Warrantor pertaining to the business of the Acquired Companies relating to periods prior to the Completion Date, and make the same available for inspection and copying by the Buyer or any of its Affiliates and its and their officers, directors, employees or professional advisers, at the expense of the Buyer, during the normal business hours of the Company upon reasonable request and upon reasonable notice, as the Buyer or its Affiliates may reasonably require:

(a) to enable the relevant person to prepare their respective statutory or management accounts; or

24 (b) for any other accounting purpose or other purpose relating to Taxes required by applicable law, regulation, governmental or regulatory authority or the rules of any stock exchange to which they are subject.

7.3 Any Party may refuse access under Clauses 7.1 and 7.2 to the extent that such access would in the opinion of such Party (acting reasonably) be contrary to any applicable Law or regulation. Clauses 7.1 and 7.2 shall not require any Party to carry out any act or omission or provide or otherwise give access to any information which may cause it to waive or result in the waiver of any legal privilege in any documentation or information subject to legal privilege.

8. CONFIDENTIALITY

8.1 Subject to Clause 8.4, each Party:

8.1.1 shall treat as strictly confidential:

(1) the provisions of the Disclosure Letter and the process of the negotiation of this Deed and the Disclosure Letter; and

(2) in the case of the Warrantors, any information received by or held by the Warrantors or any of their Representatives in connection with the transaction contemplated by the Offer which relates to the Buyer or its Affiliates,

(together “Confidential Information”); and

8.1.2 shall not, except with the prior written consent of the other Parties, make use of (save for the purposes of performing its obligations under this Deed) or disclose to any person (other than Representatives and providers of debt finance) any Confidential Information.

8.2 Each Party undertakes that it shall only disclose Confidential Information to Representatives and providers of debt finance for the purposes of the Offer where it is reasonably required for the purposes of performing its obligations under this Deed or the Offer Document and only where such recipients are informed of the confidential nature of the Confidential Information and the provisions of this Clause 8 and instructed to comply with this Clause 8 as if they were a party to it.

8.3 Subject to Clause 8.4, any announcement (including any communication made to the public, to any customers, suppliers or employees of any of the Acquired Companies) concerning the Offer shall be in a form approved in writing by the Buyer and the Warrantors’ Representative in advance of issue or in the agreed form.

8.4 Clauses 8.1.1, 8.1.2 and 8.3 shall not apply if and to the extent that the Party using or disclosing Confidential Information or making such announcement can demonstrate that:

25 8.4.1 such disclosure or announcement is required by the Offer Document, by Law or by any stock exchange or any supervisory, regulatory, governmental or anti-trust body (including any Tax Authority) having applicable jurisdiction; or

8.4.2 the Confidential Information concerned has come into the public domain other than through its fault (or that of its Representatives) or the fault of any person to whom such Confidential Information has been disclosed in accordance with this Clause 8.4.

8.5 The provisions of this Clause 8 shall survive termination of this Deed or Completion, as the case may be.

9. GENERAL

9.1 A variation of this Deed is valid only if it is in writing and signed by or on behalf of each Party.

9.2 Any payment made by a Warrantor to the Buyer pursuant to this Deed shall, to the extent permitted by law, be treated by the Buyer and such Warrantor as a reduction of the consideration received by such Warrantor pursuant to the Offer.

9.3 Save as otherwise provided herein, any payment to be made by any Party shall be made in full without any set off, restriction, condition or deduction for or on account of any counterclaim.

9.4 All sums payable by any Party under this Deed shall be paid free and clear of all deduction, withholdings, set-offs or counterclaims, unless otherwise required by law. The Buyer hereby waives and relinquishes any right of set-off or counterclaim, deduction or retention which the Buyer might otherwise have in respect of any claim under or in relation to this Deed or out of any payments which the Buyer may be obliged to make (or procure to be made) to the Warrantors pursuant to this Deed, the Offer Document or otherwise.

9.5 The liability of each of the Warrantors under this Deed is several (and not joint or joint and several) and no Warrantor shall have any liability for any act or omission of any other Warrantor.

9.6 Other than as set out in Clauses 3.4, 4.6, 6.9, 6.10, 6.11, 7.1 and 7.2, a Person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 (the “Act”) to enforce any term of this Deed, but this does not affect any right or remedy of a third party which exists or is available apart from the Act.

9.7 Except as otherwise provided in this Deed, each Party shall pay its own costs and expenses in relation to the negotiation, preparation, and implementation of this Deed (and the documents referred to herein), including the fees and disbursements of their respective legal, accountancy and other advisers.

10. ENTIRE AGREEMENT

26 10.1 This Deed, and the documents referred to in it, constitute the entire agreement among the Parties about the subject matter of this Deed and in relation to such subject matter, supersede any arrangements, understanding or previous agreement among the Parties and all earlier statements by any Party.

10.2 Each of the Parties acknowledges and agrees that, in entering into this Deed, it does not rely on, nor has been induced to enter into this Deed or the Offer, and will have no remedy (in equity or tort, under the Misrepresentation Act 1967 or in any other way) in respect of, any statement, representation or warranty (whether negligently or innocently made) of any person (whether a Party or not) made in connection with the Offer other than as expressly set out in this Deed. No Party shall have any claim for innocent or negligent misrepresentations based upon any statement in this Deed.

10.3 Nothing in this Deed shall have the effect of limiting or excluding any liability arising from fraud or fraudulent misrepresentation.

11. ASSIGNMENT

11.1 Except as provided in this Clause 11, no Party may assign, transfer, charge or otherwise deal with all or any of its rights under this Deed, nor grant, declare, create or dispose of any right or interest in it. Any purported assignment in contravention of this Clause 11 shall be void.

11.2 Subject to Clause 11.3, the Buyer may assign, charge or transfer any of its rights or benefits under this Deed (whether in whole or in part) to:

11.2.1 an Affiliate of the Buyer, provided that if such assignee, chargee or transferee is to cease to be an Affiliate of the Buyer then prior to such cessation such assignee, chargee or transferee must re-assign, re-charge or re-transfer such rights and benefits to the Buyer or another continuing Affiliate of the Buyer, otherwise such rights and benefits will upon such cessation immediately lapse and be of no further effect; and

11.2.2 any lender (or any agent or trustee acting on its behalf) to the Buyer solely for purposes of financing the Offer (the “Acquisition Facility”), provided that such assignment, charge or transfer is only by way of and in order to provide security in respect of the borrowings of the Buyer under such Acquisition Facility,

provided, in each case, that the Warrantors shall be under no greater obligation or liability thereby than if such assignment, charge or transfer had never occurred and that the amount of loss or damage recoverable by such assignee, chargee or transferee shall be calculated as if that person had been originally named as the Buyer in this Deed.

11.3 As soon as practicable, but in any event within five (5) Business Days after any assignment in accordance with Clause 11.2, the Buyer shall give written notice of the assignment to the Warrantors, such notice to contain reasonable details of the assignment.

12. NOTICES

27 12.1 All notices, requests, claims, demands and other communications under this Deed (a “Notice”) shall be in writing and will be delivered personally, sent by pre-paid recorded delivery or by email to the Parties at the following addresses (or at such other address for a Party as specified by like notice):

If to the Warrantors, or the Warrantors’ Representative to:

Dennis Fois Guy Sochovsky

3561 Jackson St. 427 Riviera Circle San Francisco Larkspur CA 94118 United States CA 94939 United States E-mail: [email protected] E-mail: [email protected]

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

Weil, Gotshal & Manges (London) LLP 110 Fetter Lane London EC4A 1AY United Kingdom E-mail: [email protected] Attention: Samantha McGonigle

If to the Buyer, to:

Vonage Holdings Corp. 23 Main Street Holmdel, NJ 07733 Attention: David T. Pearson, Chief Financial Officer Randy K. Rutherford, Chief Legal Officer E-mail: [email protected] [email protected]

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

Morrison & Foerster LLP 250 W. 55th Street New York, NY 10019 E-mail: [email protected] Attention: Spencer D. Klein, Esq.

12.2 Unless there is evidence that it was received earlier, a Notice is deemed given if:

12.2.1 delivered personally, when left at the address referred to in Clause 12.1;

12.2.2 sent by mail, two Business Days after posting it;

28 12.2.3 sent by email, when the email is sent, provided that a copy of the Notice is sent by another method referred to in this Clause 12 within two Business Days of sending the email,

provided that in each case where delivery by hand occurs after 6:00 p.m. on a Business Day or a day which is not a Business Day, service shall be deemed to occur at 9:00 a.m. on the next Business Day.

13. SERVICE OF PROCESS

Without prejudice to any other method of service permitted by law:

13.1 the Buyer irrevocably and unconditionally agrees to accept service of any proceedings commenced in accordance with Clause 12 if delivered by post or courier to its registered address; and

13.2 the Warrantors irrevocably and unconditionally agrees to accept service of any proceedings commenced in accordance with Clause 12 if delivered by post or courier to the Warrantor Representative at the address stated in Clause 12.

14. INVALIDITY

14.1 If any provision of this Deed is held to be illegal, invalid or unenforceable, in whole or in part, the provision shall apply with whatever deletion or modification is necessary so that the provision is legal, valid and enforceable and gives effect to the commercial intent of the Parties. Subject to the previous sentence, the illegality, invalidity or unenforceability of any provision of this Deed shall not affect the validity or enforceability of any other provision of this Deed.

15. COUNTERPARTS

This Deed may be executed in any number of counterparts, each of which when executed and delivered is an original and all of which together evidence the same agreement.

16. DELIVERY

This Deed is delivered on the date written at the start of this Deed.

17. GOVERNING LAW AND JURISDICTION

17.1 This Deed and all non-contractual or other obligations arising out of or in connection with it are governed by English law.

17.2 The courts of England have exclusive jurisdiction to settle any dispute arising from or connected with this Deed (a “Dispute”) including a dispute regarding the existence, validity or termination of this Deed, relating to any non-contractual or other obligation arising out of or in connection with this Deed or the consequences of its nullity.

29 17.3 The Parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.

17.4 The Parties agree that the documents which start any proceedings relating to a Dispute (“Proceedings”) and any other documents required to be served in relation to those Proceedings may be served in accordance with Clause 12. These documents may, however, be served in any other manner allowed by law. This Clause 17.4 applies to all Proceedings wherever started.

30 Schedule 1 MANAGEMENT WARRANTIES

1. AUTHORITY OF THE WARRANTORS

1.1 If a Warrantor is an entity, such Warrantor (i) is duly formed and organized, validly existing and in good standing under the Laws of its jurisdiction of organization and (ii) has full power and authority (x) to execute and deliver this Deed, (y) to carry out its obligations hereunder and (z) to consummate the transactions contemplated hereby.

1.2 If a Warrantor is an individual, such Warrantor has full legal capacity (i) to execute and deliver this Deed, (ii) to carry out such Warrantor’s obligations hereunder and (iii) to consummate the transactions contemplated hereby.

1.3 This Deed constitutes valid, legal and binding obligations on the Warrantor in accordance with its terms.

1.4 The execution and delivery by the Warrantor of this Deed, and compliance with its terms shall not breach or constitute a default:

1.4.1 under any agreement or instrument to which the Warrantor is a party or by which the Warrantor is bound; or

1.4.2 of any order, judgment, decree or other restriction applicable to the Warrantor.

2. ORGANIZATION, SHARES AND SUBSIDIARIES

2.1 Organization

2.1.1 The Company has been duly formed and organized and is validly existing and in good standing under the laws of England and Wales.

2.1.2 Section 2.1.2 of the Disclosure Letter sets forth each jurisdiction in which the Company is licensed or qualified to do business and the Company is duly qualified to transact business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except where the failure to be so qualified or in good standing has not had and would not reasonably be expected to have a Material Adverse Effect.

2.1.3 The Company has full corporate power and authority to own or lease and operate its properties and assets now owned, operated or leased by it and to carry on its business as it has been and is currently conducted by it.

31 2.1.4 The Governing Documents of the Company have been made available to the Buyer and are correct, complete and in full force and effect, and the Company is not in violation of any term thereof.

2.2 Shares

2.2.1 As at the date of this Deed, the issued share capital of the Company is set forth in Section 2.2.1 of the Disclosure Letter.

2.2.2 As at the date of this Deed, a true, complete and correct copy of the capitalization table of the Company which (i) includes a list of all issued Shares, all vested and unvested Company Stock Options and all warrants to subscribe for Shares; and (ii) identifies the legal owner of each of the foregoing Equity Interests, is set forth in the Disclosure Documents.

2.2.3 As at the date of this Deed, the Shares comprise the entire allotted and issued share capital of the Company, have been duly authorized, are validly issued, fully paid or credited as fully paid, and, as at the date of this Deed, are held of record by each Person as set forth in Section 2.2.3 of the Disclosure Letter.

2.2.4 The Warrantors are entitled to transfer the legal and beneficial title to their respective Shares to the Buyer free from all Encumbrances, without the consent of any other Person.

2.2.5 Save with respect to the Company Stock Option Plans, there are no outstanding Commitments of any kind relating to the Company.

2.2.6 There is no Encumbrance, and there is no agreement, arrangement or obligation to create or give an Encumbrance, in relation to any of the Shares, or any un-issued shares in the capital of the Company.

2.2.7 None of the Shares were issued in violation of any Contract or Commitment to which the Warrantors or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Person.

2.2.8 There are no voting agreements, voting trusts, shareholder agreements, revocable or irrevocable proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Shares.

2.2.9 There are no voting agreements, voting trusts, shareholder agreements, revocable or irrevocable proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the Shares, in each case to which the Company is a party that shall not terminate automatically at such time that the Company becomes a wholly-owned subsidiary of the Buyer.

32 2.2.10 There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Equity Interests of the Company.

2.2.11 With respect to the Company Stock Options, (i) each grant of an option was duly authorized no later than the date on which the grant of such option was by its terms to be effective (the “Grant Date”) by all necessary corporate action, (ii) all options issued to U.S. taxpayers have an exercise price equal to no less than the fair market value of the underlying Shares on the Grant Date, as determined in accordance with Section 409A of the Code, (iii) each such grant was made in accordance with the terms of the Company Stock Option Plan and all applicable Laws, including valid exemptions from registration under the Securities Act and all other applicable securities laws, (iv) the Company Stock Option Plan is the only plan or program the Company maintains under which outstanding options to acquire Company Stock Options, stock appreciation rights or other compensatory equity-based awards have been or may be granted, (v) each award of Company Stock Options has been made using the standard form award agreement under the Company Stock Option Plan, a true, correct and complete copy of which has been made available to the Buyer and (vi) no Company Stock Options differ in any material respect from such form agreement.

2.3 Subsidiaries

2.3.1 Section 2.3.1 of the Disclosure Letter sets forth the names of the direct and indirect Subsidiaries of the Company, the jurisdictions in which each Subsidiary is organized and the equity ownership thereof. Other than the Company Subsidiaries, the Company does not own any Equity Interest in any Person.

2.3.2 Each Company Subsidiary has been duly formed and organized and is validly existing and in good standing under the Laws of the jurisdiction of its formation.

2.3.3 Each Company Subsidiary is duly qualified to transact business in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities makes such qualification necessary, except where the failure to be so qualified or in good standing has not had and would not reasonably be expected to have a Material Adverse Effect.

2.3.4 Each Company Subsidiary has the full corporate power and authority to own or lease and operate its properties and assets now owned, operated or leased by it and to carry on its business as currently conducted by it.

2.3.5 The Company has made available to the Buyer copies of the Governing Documents of each Company Subsidiary and each Governing Document is

33 in full force and effect, and no Company Subsidiary is in violation of any term thereof.

2.3.6 The Company holds all of the outstanding Equity Interests of the Company Subsidiaries, free and clear of any Encumbrances other than those imposed by applicable Laws.

2.3.7 All of the issued and outstanding Equity Interests of the Company Subsidiaries have been duly authorized, and are validly issued, fully paid or credited as fully paid.

2.3.8 There is no Encumbrance, and there is no agreement, arrangement or obligation to create or give an Encumbrance, in relation to any of the Equity Interests of the Company Subsidiaries, or any un-issued shares in the capital of the Company Subsidiaries.

2.3.9 There are no outstanding Commitments of any kind relating to any Company Subsidiary.

2.3.10 There are no voting agreements, voting trusts, shareholder agreements, revocable or irrevocable proxies or other agreements or understandings in effect with respect to the voting or transfer of any Equity Interests of the Company Subsidiaries.

2.3.11 There are no outstanding contractual obligations of the Company Subsidiaries to repurchase, redeem or otherwise acquire any Equity Interests of the Company Subsidiaries.

2.3.12 None of the Acquired Companies is, in relation to any company (other than a Subsidiary), a limited liability partnership or Societas Europaea registered in the UK, a registrable relevant legal entity within the meaning of section 790C of the CA 2006.

2.3.13 No warning notice or restrictions notice has been issued under Schedule 1B (Enforcement of disclosure requirements) of the CA 2006 in respect of any shares or voting rights in, or any right to appoint or remove any member of the board of directors of, any of the Acquired Companies.

3. CONSENTS

3.1 A change of Control of the Acquired Companies does not and will not:

3.1.1 violate, conflict with or result in a default (whether after the giving of notice, lapse of time or both) under, give rise to a right of termination of, or require any notice or approval under, any Material Contract to which any Acquired Company is a party or by which any Acquired Company’s assets are bound;

34 3.1.2 conflict with, or result in any violation of, any provision of the Governing Documents of any Acquired Company;

3.1.3 violate or result in a violation of, or constitute a default under (whether after the giving of notice, lapse of time or both), any provision of any Law, or any Governmental Order of, or any restriction imposed by, any Governmental Body applicable to any Acquired Company;

3.1.4 require the consent, notice or approval by any Person under, any Contract to which any Acquired Company is a party or by which any Acquired Company is bound or to which any of their respective properties and assets are subject (including any Material Contract) or require the consent, notice or approval by any Person under, or result in a violation or breach of, any Permit affecting the properties, assets or business of the Acquired Companies; or

3.1.5 result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on any properties or assets of the Acquired Companies, except, in the case of paragraphs 3.1.2 and 3.1.3 of this Schedule 1, for any such conflicts, defaults or violations that have not had, and would not reasonably be expected to have, a Material Adverse Effect.

3.2 No notice to, declaration or filing with, or consent or approval of any Governmental Body, is required by or with respect to the Acquired Companies purely as a result of the Offer (or the implementation thereof), and for the avoidance of doubt excluding any such declaration or filing with, or consent or approval of any Governmental Body which is required as a result of the identity or nature of the Buyer in any respect.

4. ACCOUNTS

4.1 The Accounts are based on the books and records of the Acquired Companies and have been prepared and audited on a consistent basis in accordance with the Law and UK GAAP.

4.2 The Accounts show a true and fair view of the assets, liabilities, state of affairs and profits and losses of the Acquired Companies as a whole as at the Last Accounts Date.

4.3 The Acquired Companies have no material liabilities or commitments, (absolute or contingent, accrued or unaccrued, matured or unmatured) in each case that would be required to be reflected in the audited consolidated accounts of the Company for the relevant accounting period (“Liabilities”), except (i) those which are adequately reflected or reserved against in the Accounts, Locked Box Accounts or the Disclosure Letter, and (ii) those that were incurred after the Last Accounts Date in the Ordinary Course of Business and which are not, individually or in the aggregate, material in amount.

35 4.4 No Acquired Company is a party to or is liable under a guarantee, indemnity or other agreement to secure a financial obligation (except in the Ordinary Course of Business) with respect to the obligations of any Person (except for a Company Subsidiary).

5. MANAGEMENT ACCOUNTS

Having regard to the purposes for which the Management Accounts are prepared, the Management Accounts have been prepared on the bases stated therein in the Ordinary Course of Business with due care and attention, on a basis consistent, in all material respects, with the Accounts and fairly reflect the profits and losses and trading position of the Acquired Companies as at the date, and for the period, to which they relate.

6. LOCKED BOX ACCOUNTS

The Locked Box Accounts have been prepared on the bases stated therein in the Ordinary Course of Business with due care and attention, on a basis consistent, in all material respects, with the accounting policies and procedures used to prepare the Management Accounts for the period of 12 months preceding the date of this Deed.

7. CONDUCT SINCE THE LOCKED BOX DATE

Between the Locked Box Date and the date of this Deed, other than in the Ordinary Course of Business, there has not been, with respect to any Acquired Company, any:

7.1.1 event, occurrence or development that has had a Material Adverse Effect;

7.1.2 amendment of the Governing Documents;

7.1.3 split, combination or reclassification of any shares of their respective Equity Interests;

7.1.4 any issuance, sale or other disposition of, or creation of any Encumbrance on, any of their respective Equity Interests, or grant of any options, warrants or other rights to purchase or obtain (including upon conversion, exchange or exercise) any of their respective Equity Interests;

7.1.5 change in any method of financial reporting, accounting or accounting practice of the Acquired Companies;

7.1.6 material change in the Acquired Companies’ cash management practices and its policies, practices and procedures with respect to collection of accounts receivable, establishment of reserves for uncollectible accounts, accrual of accounts receivable, inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, deferral of revenue or acceptance of clients deposits;

7.1.7 entry into any Contract that would constitute a Material Contract;

36 7.1.8 incurrence, assumption or guarantee of any Indebtedness except unsecured current obligations and liabilities incurred in the Ordinary Course of Business;

7.1.9 transfer, assignment, sale or other disposition of any of the assets shown or reflected in the Accounts other than in the Ordinary Course of Business;

7.1.10 any capital investment in, or any loan to, any other Person;

7.1.11 acceleration, termination, material modification to or cancellation of any Material Contract;

7.1.12 any capital expenditures in excess of One Hundred Thousand Dollars ($100,000) individually or Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate;

7.1.13 imposition of any Encumbrance upon any of the Acquired Companies properties (other than a Permitted Encumbrance), tangible or intangible assets (other than a Permitted Encumbrance), or Equity Interest;

7.1.14 (i) grant of any bonuses, whether monetary or otherwise, or increase in any wages, salary, severance, pension or other compensation or benefits in respect of the Acquired Companies’ current or former employees, officers, directors, independent contractors or consultants, other than as provided for in any written agreements or required by applicable Law, (ii) change in the terms of employment or status for any employee or any termination of any employee for whom the aggregate costs and expenses exceed Fifty Thousand Dollars ($50,000), or (iii) action to accelerate the vesting or payment of any compensation or benefit for any current or former employee, officer, director, independent contractor or consultant;

7.1.15 hiring or promoting any employee except in the Ordinary Course of Business;

7.1.16 adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant, (ii) Benefit Plan or (iii) collective bargaining or other agreement with a Union, in each case whether written or oral;

7.1.17 any loan to (or forgiveness of any loan to), or entry into any other transaction with, any of their respective shareholders or current or former directors, officers and employees;

7.1.18 entry into a new line of business or abandonment or discontinuance of existing lines of business;

37 7.1.19 adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal, state or non-U.S. bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar law;

7.1.20 acquisition by merger or consolidation with, or by purchase of substantially all of the assets or equity of, or by any other manner, any business or any Person or any division thereof;

7.1.21 action by or on behalf of the Acquired Companies to make, change or rescind any Tax election, amend, refile or otherwise revise any previously filed Tax Return, settle or compromise any claim, notice, audit report, assessment or other proceeding in respect of Taxes, consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment, make any change to (or make a request to any Tax Authority to change) any of its methods of Tax accounting, enter into or terminate any agreement with any Tax Authority, enter into a Tax allocation, sharing, indemnity or similar agreement (other than credit or other commercial agreements the primary purpose of which does not relate to Taxes), grant any power of attorney relating to Tax matters, or take any position on any Tax Return, take any action, omit to take any action or enter into any other transaction that would have the effect of increasing the Tax liability or reducing any Tax asset of the Acquired Companies or Buyer in respect of any post-completion tax period;

7.1.22 commencement, settlement, or offer or proposal to commence or settle (i) any Action involving or against the Acquired Companies, (ii) any Action with the Warrantors involving or against the Acquired Companies or (iii) any Action that relates to the transactions contemplated hereby;

7.1.23 any declaration or payment of dividends or distributions (including a distribution within the meaning of section 1000 of the CTA 2010) to any Person other than a Subsidiary except as provided in the Accounts; or

7.1.24 any Contract to do any of the foregoing, or any action or omission that would result in any of the foregoing.

8. TAX

Tax Returns, Taxes and Audits

8.1 Each of the Acquired Companies (A) has properly completed and timely filed all Tax Returns required to be filed by it, and all such Tax Returns are true, correct and complete in all material respects and (B) has timely paid all Taxes due and owing by it (whether or not shown on any Tax Returns).

38 8.2 No deficiencies for any Tax have been threatened, claimed, proposed or assessed in each case against any of the Acquired Companies.

8.3 None of the Acquired Companies has received from any Tax Authority any written (A) notice indicating an intent to open an audit or enquiry, (B) request for information related to Tax matters, or (C) notice of deficiency or proposed adjustment of any amount of Tax. No Tax Return of any of the Acquired Companies is under audit by any Tax Authority and all past audits (if any) have been completed and fully resolved to the satisfaction of the applicable Tax Authority conducting such audit and all Taxes determined by such audit to be due from any of the Acquired Companies have been paid in full to the applicable Tax Authority. No claim has ever been made by a Tax Authority in a jurisdiction where any Acquired Company does not file a particular type of Tax Return or pay a particular type of Tax that such Acquired Company is or may be required to file such Tax Return or pay such Tax in that jurisdiction.

8.4 There are no Encumbrances for Taxes upon the assets of the Acquired Companies, except for Permitted Encumbrances. There is not in effect any waiver by any of the Acquired Companies of any statute of limitations with respect to any Taxes and no Acquired Company has agreed to any extension of time for filing any Tax Return that has not since been filed. None of the Acquired Companies has consented to extend the period in which any Tax may be assessed or collected by any Tax Authority which extension is still in effect.

8.5 None of the Acquired Companies will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Completion Date as a result of: (A) the application of Section 481 of the Code, (B) any “closing agreement,” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or non-U.S. Tax Law) executed on or prior to the Completion Date, (C) any “intercompany transaction” or any “excess loss account” (within the meaning of Treasury Regulations Sections 1.1502- 13 and 1502-19, respectively) (or any corresponding or similar provisions of state, local or non-U.S. Tax Law) occurring or arising with respect to any transaction on or prior to the Completion Date, (D) any installment sale, open transaction or other transaction made on or prior to the Completion Date, or (E) any prepaid amount received on or prior to the Completion Date.

Withholding

8.6 Each of the Acquired Companies has complied in all material respects with all applicable Laws relating to the payment, collection and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442, 1445 and 1446 of the Code or any corresponding or similar provision of state, local or non-U.S. Tax Law), and has, within the time and in the manner prescribed by applicable Law, withheld from employee wages and other amounts payable to third parties and paid over to the appropriate Tax Authority all material amounts required to be so withheld and paid over under all applicable Laws (including the Federal Insurance Contribution Act, Medicare, Federal Unemployment Tax Act and relevant state and non-U.S. income and employment Tax withholding Laws), including federal, state, local

39 and non-U.S. Taxes, and has timely filed or provided all material withholding Tax Returns in accordance with applicable Law.

Special Tax Status and Indemnification Obligations

8.7 No Acquired Company is a party to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement, excluding any agreement entered into in the Ordinary Course of Business, the principal purpose of which is unrelated to Taxes.

8.8 None of the Acquired Companies is now, or has during the period of six years prior to the date of this Agreement been, a member of a consolidated, combined, unitary or aggregate group of which the Company was not the ultimate parent corporation. None of the Acquired Companies has any liability for Taxes of any Person (other than another Acquired Company) under Treasury Regulations Section 1.1502-6 (or any corresponding or similar provision of state, local or non- U.S. Tax Law), as a transferee or successor, by contract or otherwise.

8.9 None of the Acquired Companies has constituted within the two years prior to the date of this Deed either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify in whole or in part for Tax-free treatment under Section 355 of the Code (or so much of Section 356 of the Code as relates to Section 355 of the Code).

8.10 None of the Acquired Companies is or has been a party to a transaction or contract that is in conflict with the Tax rules on transfer pricing in any relevant jurisdiction. All applicable transfer pricing rules have been complied with, and all documentation required by all relevant transfer pricing Laws has been timely prepared.

8.11 None of the Acquired Companies is or has been a party to any joint venture, partnership or other arrangement or contract that would likely be treated as a partnership for federal income Tax purposes. No entity classification election pursuant to Treasury Regulations Section 301.7701-3 has ever been filed with respect to any of the Acquired Companies.

8.12 None of the Acquired Companies is the beneficiary of any Tax exemption.

8.13 None of the Acquired Companies has a permanent establishment (within the meaning of an applicable Tax treaty) in any country other than the country in which it was formed. None of the Acquired Companies operates or conducts business through any branch in any country other than the country in which it was formed.

8.14 None of the Acquired Companies has ever requested or received a ruling from any Tax Authority or signed a closing or other agreement with any Tax Authority.

8.15 No amount payable as a result of or in connection with the consummation of the transaction contemplated hereby to any Person could be characterized as any “excess parachute payment” (as defined in Section 280G(b)(1) of the Code). There is no Benefit Plan by which any of the Acquired Companies are bound to compensate any employee of such Acquired

40 Company or other service provider of such Acquired Company for excise Taxes paid pursuant to Section 409A or 4999 of the Code.

8.16 All Company Stock Options (whether current outstanding or not) issued to service providers based in the United States have an exercise price equal to no less than the fair market value of the underlying Shares on the grant date, as determined in accordance with Section 409A of the Code.

Claims, elections etc.

8.17 Every claim, election and disclaimer which has been taken into account for the purposes of the Accounts has been duly submitted by the applicable Acquired Company within the requisite periods and either has been accepted as valid or its validity has not been questioned or challenged by the relevant Tax Authority.

Close Investment Companies

8.18 The Company is a close company as defined in s.439 CTA 2010 but has never been a close investment holding company as defined in s.34 CTA 2010 for financial years before the financial year commencing 1 April 2015.

Value Added Tax

8.19 The Company is registered as a taxable person for the purposes of VAT and has never been registered as a member of a group of companies under s.43 VATA nor applied to be treated as such a member.

9. ASSETS

9.1 Each of the Acquired Companies owns or otherwise has the right to use each material asset used by it, in the conduct or operation of the Company Business as conducted or operated, and no such owned assets are subject to any Encumbrance (other than any Encumbrance which is to be discharged on or prior to Completion).

9.2 The Acquired Companies have title to, or rights to use, all material tangible assets used by the Acquired Companies to conduct the business of the Acquired Companies as currently conducted. All such tangible assets are adequate for the use to which they are being put and are in reasonable operating condition and repair.

9.3 None of the Affiliates of the Warrantors owns, holds, or controls any of the rights, property, or assets necessary to conduct the business of the Acquired Companies as currently conducted.

10. INTELLECTUAL PROPERTY

10.1 Section 10.1 of the Disclosure Letter sets forth a complete and accurate list of all (i) Registered Company Intellectual Property Rights and (ii) unregistered Marks owned by

41 each of the Acquired Companies, other than any such unregistered Marks that are neither material nor used in a material manner by any of the Acquired Companies. For each item of Registered Company Intellectual Property Rights, such document lists (A) the record owner of such item, and, if different, the legal owner and beneficial owner of such item, (B) whether such item is issued, registered or pending, (C) the jurisdiction in which such item is issued, registered or pending, (D) the issuance, registration or application date and number of such item, and (E) for each Domain Name registration, the applicable Domain Name registrar, the name of the registrant and the expiration date for the registration.

10.2 All necessary fees and filings with respect to any Registered Company Intellectual Property Rights (other than Registered Company Intellectual Property Rights which an Acquired Company has, in its reasonable business judgment, chosen to abandon) have been timely submitted to the relevant Governmental Body and Domain Name registrars to maintain such Registered Company Intellectual Property Rights. No issuance or registration obtained and no application filed by any of the Acquired Companies for any Intellectual Property Rights has been cancelled, abandoned, allowed to lapse or not renewed, except where such Acquired Company has, in its reasonable business judgment, decided to cancel, abandon, allow to lapse or not renew such issuance, registration or application.

10.3 The Acquired Companies are the sole and exclusive owner of all right, title and interest in and to (i) all Registered Company Intellectual Property Rights and (ii) all other Company Intellectual Property Rights and Company Technology owned or purported to be owned by any of the Acquired Companies (clauses (i) and (ii) collectively, the “Owned Company IP”), free and clear of all Encumbrances. All Company Intellectual Property Rights and Company Technology that are not Owned Company IP (“Licensed IP”) are duly licensed to the Acquired Companies. The Acquired Companies have continuing rights (including under any Contracts) to use, sell, license and otherwise exploit, as the case may be, all Licensed IP as the same are currently used, sold, licensed and otherwise exploited by the Acquired Companies.

10.4 All Owned Company IP is freely transferable and assignable or may be extended to the Buyer without restriction and without payment of any kind to the Warrantors or any other Person.

10.5 The Owned Company IP and the Licensed IP constitute all of the Intellectual Property Rights and Technology necessary and sufficient to enable the Acquired Companies to conduct the Company Business as currently conducted. The preceding sentence shall not constitute any representation or warranty regarding infringement, misappropriation or other violation of any Intellectual Property Rights of any Person.

10.6 To the Warrantors’ Knowledge, none of the Registered Company Intellectual Property Rights have been or are subject to any interference, derivation, reexamination (including ex parte reexamination, inter partes reexamination, inter partes review, post grant review or Covered Business Method (CBM) review), cancellation, or opposition proceeding.

42 10.7 Section 10.7 of the Disclosure Letter sets forth a complete and accurate list of all Intellectual Property Licenses under which the licensed rights expressly include exclusive licenses to Patents and that are granted (i) from another Person to any of the Acquired Companies, and (ii) from any of the Acquired Companies to another Person.

10.8 To the Warrantors' Knowledge, neither the conduct of the Company Business nor any Company Offering (including the use, practice, offering, licensing, provision, sale, distribution or other exploitation of any Company Offering) (i) has been or is infringing, misappropriating (or resulting from the misappropriation of), diluting, using or disclosing without authorization, or otherwise violating any Intellectual Property Rights of any third Person, (ii) when conducted immediately following Completion in the same manner as conducted immediately prior to Completion, will infringe, misappropriate, dilute, use or disclose without authorization, or otherwise violate any Intellectual Property Rights of the Warrantors or any third Person; (iii) has been or is contributing to or inducing any infringement, misappropriation, or other violation of any Intellectual Property Rights of any third Person, (iv) when conducted immediately following Completion in the same manner as conducted immediately prior to Completion, will contribute to or induce any infringement, misappropriation, or other violation of any Intellectual Property Rights of the Warrantors or any third Person; or (v) has been or is constituting (or, when conducted immediately following Completion in the same manner as conducted immediately prior to Completion, will constitute) unfair competition or trade practices under the applicable Laws of any relevant jurisdiction.

10.9 None of the Acquired Companies has received any written notice, or, to the Warrantors’ Knowledge, any other notice, from any Person (i) alleging any infringement, misappropriation, misuse, dilution, violation, or unauthorized use or disclosure of any Intellectual Property Rights or Technology or unfair competition, (ii) inviting any of the Acquired Companies to consider the applicability of any Intellectual Property Rights to any Company Offerings or the conduct of the Company Business or (iii) challenging the ownership, use, validity or enforceability of any Owned Company IP, or Company Technology, nor, to the Warrantors’ Knowledge, is there any basis for any Person to make any such allegation, invitation, or challenge as set forth in the foregoing subschedules (i)-(iii).

10.10 To the Warrantors’ Knowledge, no Person is infringing, misappropriating, diluting or violating any Company Intellectual Property Rights, Company Technology owned by or exclusively licensed to any of the Acquired Companies, or Company Offering. None of the Acquired Companies has made any claim against any Person alleging any infringement, misappropriation, misuse, dilution or violation of any Company Intellectual Property Rights, Company Technology owned by or exclusively licensed to any of the Acquired Companies, or Company Offering.

10.11 Each of the Acquired Companies has taken commercially reasonable measures to protect all Proprietary Information of the Acquired Companies and all Proprietary Information of any other Person in any of the Acquired Companies’ possession or control, or to which any

43 of the Acquired Companies has access, with respect to which any of the Acquired Companies has a confidentiality obligation. No such Proprietary Information has been authorized to be disclosed, or, to the Warrantors’ Knowledge, has been actually disclosed, to any Person other than pursuant to a written confidentiality Contract restricting the disclosure and use of such Proprietary Information. Each current and former employee and consultant of any of the Acquired Companies that has been involved in the authorship, invention, creation, conception or other development of any Owned Company IP has entered into a written non-disclosure and invention assignment Contract with such Acquired Company that assigns to such Acquired Company all Intellectual Property Rights and Technology authored, invented, created or otherwise developed by such employee or consultant in the scope of his, her or its employment or engagement with such Acquired Company, save where ownership of such Intellectual Property Rights automatically vests in an Acquired Company upon creation by operation of applicable Law (an “Invention Assignment Agreement”). No current or former employee or consultant of any of the Acquired Companies has (i) (having been asked to do so) failed to affirmatively indicate that he, she or it has no Technology (and no Intellectual Property Rights in or to any Technology) that is excluded from his, her or its assignment of inventions pursuant to such Person’s Invention Assignment Agreement, or (ii) alleged to any of the Acquired Companies or, to the Knowledge of the Warrantors, any other Person, ownership or other exclusive rights by such employee or consultant in any Intellectual Property authored, invented, created, conceived or otherwise developed by such employee or consultant in the scope of his, her or its employment or engagement with such Acquired Company, using any of the applicable Acquired Company’s Intellectual Property Rights or Technology, or that is otherwise purportedly within the scope of his, her or its assignment of inventions pursuant to such Person’s Invention Assignment Agreement.

10.12 Section 10.12 of the Disclosure Letter sets forth an accurate and complete list of all material third party Software (other than Open Source Software disclosed in Section 10.13 of the Disclosure Letter) that is (i) incorporated or embedded in or bundled with any Company Software or (ii) except for Software licensed under Non-Negotiated Vendor Contracts, otherwise used by any of the Acquired Companies in the Company Business. None of the source code for any Company Software has been licensed or provided by any Acquired Company to, or, to the Warrantors’ Knowledge, used or accessed by, any Person other than employees, consultants and contractors of the Acquired Companies who have entered into written confidentiality obligations with respect to such source code. None of the Acquired Companies is a party to any source code escrow Contract or any other Contract (or a party to any Contract obligating any of the Acquired Companies to enter into a source code escrow Contract or other Contract) requiring the deposit of any source code for any Company Software.

10.13 Section 10.13 of the Disclosure Letter sets forth an accurate and complete list of all Open Source Software that is or has been included, incorporated or embedded in, combined or distributed with, or used in the delivery or provision of any Company Software or any Company Offering. Each of the Acquired Companies has complied and does comply with all license terms applicable to any item of Open Source Software disclosed, or required to be disclosed pursuant to this paragraph.

44 10.14 No Open Source Software is or has been included, incorporated or embedded in, combined or distributed with or used in the delivery or provision of any Company Software or any Company Offering, in each case, in a manner that subjects any Company Software to any Copyleft License or that requires any of the Acquired Companies to grant any Intellectual Property License with respect to their Patents.

10.15 To the Warrantors’ Knowledge, the Company Software and Company Offerings are free from any material defect or bug, or programming, design or documentation error. To the Warrantors’ Knowledge, none of the Company Software or Company Offerings constitutes or contains any Contaminants. Except in accordance with the applicable Company Privacy Policies and Laws, none of the Company Software or the Company Offerings (i) sends information of a user to another Person without the user’s consent, (ii) monitors or records a user’s actions without such user’s knowledge and, to the extent required by applicable Law, consent, or (iii) employs a user’s Internet connection without such user’s knowledge and, to the extent required by applicable Law, consent, to gather or transmit information regarding such user or such user’s behavior.

10.16 No government funding and no facilities of any university, college, other educational institution or research center were used by the Acquired Companies in the development of any Owned Company IP, nor does any Governmental Body or any university, college, other educational institution, or research center own, have any other rights in or to (including through any Intellectual Property License), or have any option to obtain any rights in or to, any Owned Company IP.

10.17 The Offer will not, pursuant to any Contract to which any of the Acquired Companies is a party or otherwise bound, result (or purport to result) in the transfer or grant by any of the Acquired Companies or the Buyer or any of its Affiliates to any Person of any ownership interest or Intellectual Property License with respect to any Company Intellectual Property Rights or Company Technology or any Intellectual Property Rights or Technology of the Buyer or any of its Affiliates.

11. IT SYSTEMS

11.1 The IT Systems are adequate and sufficient (including with respect to working condition and capacity) to conduct the Company Business as currently conducted.

11.2 Each of the Acquired Companies (i) has taken reasonable measures to preserve and maintain the performance, security and integrity of the IT Systems (and all Software, information or data stored on any IT Systems) and (ii) maintains reasonable (taking into account, to the extent applicable, the cloud-based nature of the Acquired Companies’ products and services) documentation regarding all IT Systems, their methods of operation and their support and maintenance.

11.3 During the twelve month period prior to the date hereof, (A) there has been no failure with respect to any IT Systems that has had a material effect on the operations of any of the Acquired Companies and (B) to the Knowledge of the Warrantors, there has been no

45 unauthorized access to or use of any IT Systems (or any Software, information or data stored on any IT Systems).

11.4 Immediately following Completion, the Acquired Companies shall have and be permitted to exercise the same rights (whether ownership, license or otherwise) with respect to the IT Systems as the Acquired Companies would have had and been able to exercise had this Deed, and such other agreements, documents and instruments to be executed and delivered after the date hereof, not been entered into and the transactions contemplated by this Deed and the Offer not occurred, without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Acquired Companies would otherwise have been required to pay.

12. DATA PROTECTION

12.1 Each of the Acquired Companies maintains a policy that governs its collection, use, storage, retention, disclosure and disposal of Personal Information (each, a “Privacy Policy”). Each of the Acquired Companies’ practices conform in all material respects to the applicable Privacy Policy. Each of the Acquired Companies has during the five years prior to the date of this Agreement complied in all material respects with all applicable Laws (including the Data Protection Act 1998, the General Data Protection Regulation (EU) 2016/679, the Data Protection Act 2018, the Privacy and Electronic Communications (EC Directive) Regulations 2003, Part I of the Regulation of Investigatory Powers Act 2000) relating to: (i) the privacy of users of each of the Acquired Companies’ websites, mobile applications, and other Company Offerings; (ii) the collection, compilation, use (including, without limitation, for communications and direct marketing purposes), storage, processing, retention, safeguarding, transfer (including cross-border transfer), disclosure, and disposal of any Personal Information by or on behalf of any of the Acquired Companies; and (iii) the Payment Card Industry Data Security Standard (“PCI DSS”) with respect to any payment card data that the Acquired Company has collected or processed. To the Warrantors' Knowledge, any third party that processes payment card data on behalf of an Acquired Company complies and at all times has complied with the PCI DSS. At all times since inception, each of the Acquired Companies has provided notice of its applicable Privacy Policy on all of its websites and mobile applications where required by applicable Laws at such time. These notices and all materials distributed or marketed by, and to the Warrantors' Knowledge, on behalf of the Acquired Companies to users or customers (i) are materially in compliance with all applicable Laws and (ii) do not contain any material omissions and are not misleading or deceptive.

12.2 The Acquired Companies have during the five years prior to the date of this Agreement implemented and maintained a written security plan which implements and monitors commercially reasonable administrative, technical, and physical safeguards designed to ensure that Personal Information, intellectual property that derives its value from not being publicly known, or any other confidential or sensitive information (collectively, “Protected Data”) within the possession or control of the Acquired Companies is protected against loss, damage, unauthorized access, unauthorized use, unauthorized modification, or other misuse

46 (such plans, collectively, the “Security Practices”). The Security Practices materially conform, and at all times during the five years prior to the date of this Agreement have materially conformed, with (i) any information security statements in the Company’s applicable Privacy Policy then in effect, (ii) any public statements regarding the Acquired Companies’ information security practices made by any of the Acquired Companies, and (iii) all of the Acquired Companies’ contractual commitments. No Actions have been asserted or, to the Knowledge of the Warrantors, are threatened against any of the Acquired Companies by any Person with respect to the security of Protected Data in the possession or control of an Acquired Company. To the Warrantors' Knowledge, there has been no unauthorized access to, or disclosure or misuse of, or other breach of the security of Protected Data owned or controlled by, or on behalf of, any of the Acquired Companies. None of the Acquired Companies have notified, nor have any of the Acquired Companies been required to notify (whether pursuant to any applicable Law or otherwise), any Person of any information security breach or incident involving Personal Information.

12.3 No Person has, to the Warrantors' Knowledge, made any written claim or commenced any claim or investigation with respect to an Acquired Company’s compliance with applicable Laws relating to data privacy or data security.

13. ENVIRONMENTAL MATTERS

(a) Each Acquired Company is and has been in compliance in all material respects with all Environmental Laws applicable to its operations and use of the Leased Real Property, (b) to the Warrantors’ Knowledge there has been no material Release or threat of Release of any Hazardous Material by any Acquired Company at or on the Leased Real Property that requires reporting, investigation or remediation by the Acquired Companies pursuant to any Environmental Law, (c) except for those matters that are no longer pending, no Acquired Company has received any material written request for information, notice, demand letter, administrative inquiry or written complaint or claim under any Environmental Law or been subject to any governmental or citizen enforcement action with respect to any Environmental Law and (d) to the Warrantors’ Knowledge, no real property ever owned, operated or leased by the Acquired Companies is listed on, or has been proposed for listing on, the National Priorities List or on the CERCLIS, or any analogous non-U.S., state or local list.

14. INSURANCE

14.1 The Buyer has been provided with a list of the material insurance policies held by, or for the benefit of, the Acquired Companies (the “Insurance Policies”).

14.2 Each Insurance Policy is in full force and effect as of the date hereof and all premiums have been paid in full.

14.3 As of the date hereof, no notice of cancellation, premium increase, alteration of coverage or termination has been received by the Acquired Companies with respect to any such Insurance Policy.

47 14.4 There are no claims related to the business of the Acquired Companies pending under any Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights.

14.5 The Acquired Companies are not in default under, or have otherwise failed to comply with, in each case in any material respect, any provision contained in any Insurance Policy.

14.6 The Insurance Policies are sufficient for compliance with all applicable Laws and Contracts to which the Acquired Companies are a party or by which they are bound.

15. MATERIAL CONTRACTS

15.1 No Acquired Company is party to a Contract which:

15.1.1 is with a Material Client as a counterparty or is a customer contract which cannot be cancelled by the applicable Acquired Company without penalty or without more than three months’ notice;

15.1.2 is a partnership agreement or joint venture Contract pursuant to which an Acquired Company has an obligation to make an investment in or loan to any Person or that involves a sharing of revenues, profits, losses, costs or liabilities by an Acquired Company with any Person (other than the Company);

15.1.3 requires any Acquired Company to purchase its total requirements of any product or service from a third party or that contain “take or pay” provisions;

15.1.4 provides for the assumption of any Tax or environmental Liability of, any Person other than an Acquired Company;

15.1.5 establishes a contractual relationship between any Acquired Company and any worker, independent contractors or consultants (or similar arrangements) providing for fixed compensation in excess of Two Hundred Fifty One Thousand Dollars ($251,000) per annum other than such employment agreements or Contracts which are terminable without cost or liability to the Acquired Companies;

15.1.6 is a collective bargaining agreement or Contract with any Union to which any Acquired Company is a party;

15.1.7 other than in the Ordinary Course of Business, any Contract (excluding for the avoidance of doubt any contract of employment with any employee, or former employee or consultant) that (i) provides for the authorship, invention, creation, conception or other development of any Technology or Intellectual Property Rights (A) by any of the Acquired Companies for any other Person or (B) for any of the Acquired Companies by any other Person, including, in each of clauses (A) and (B), any joint development by any of the Acquired Companies with any other Person; (ii) provides for the assignment or other transfer of any ownership interest in Intellectual Property Rights (A) to any of the Acquired Companies from any

48 other Person or (B) by any of the Acquired Companies to any other Person; or (iii) includes any exclusive grant of an Intellectual Property License to any other Person by any of the Acquired Companies (other than, with respect to this subsection (iii) only, pursuant to Standard Form Customer Contracts);

15.1.8 is a Contract under which any Acquired Company (A) grants any exclusive rights, noncompetition rights, rights of first refusal, rights of first negotiation or most-favored customer rights, or (B) limits or purports to limit the ability of the Acquired Companies to compete in any line of business or with any Person or in any geographic area or during any period of time, time, (C) contains “clawback” or similar undertakings by the Acquired Companies requiring the reimbursement or refund of any fees, (D) contains waivers of fees or other expenses, (E) contains “key person” covenants, undertakings or notice or termination provisions or (F) contains performance-based fee or allocation provisions;

15.1.9 any Contract that following Completion would or would purport to require Buyer or any of its Affiliates (other than the Acquired Companies) to (i) grant any Intellectual Property License, (ii) assign or transfer to any Person any Company Owned IP, or (iii) subject any Company Owned IP to any Encumbrance;

15.1.10 is a Related Party Contracts which are not on arm's length terms;

15.1.11 all franchise, agency, commission and/or revenue share arrangements with third parties, sales promotion, market research, marketing consulting and advertising Contracts to which the Acquired Companies are a party;

15.1.12 relates to the sale of any of the assets of an Acquired Company within the 12 months prior to Completion, other than any such sale in the Ordinary Course of Business or the disposition or sale of obsolete assets or assets with de minimis or no book value;

15.1.13 relating to the acquisition by an Acquired Company of any operating business; or the assets constituting substantially all of any operating business; or Equity Interests of any other Person, other than agreements entered into in the Ordinary Course of Business for the acquisition of goods and services and confidentiality agreements;

15.1.14 is with any Governmental Body;

15.1.15 any Contracts relating to Indebtedness (including guarantees) of the Acquired Companies, any currency exchange, commodities or other hedging arrangement or any leasing transaction of the type required to be capitalized in accordance with UK GAAP, in each case, where any Acquired Company is a lender or borrower;

15.1.16 contains provisions requiring future contingent or non-contingent “earnout” or similar payments to be made by any Acquired Company;

49 15.1.17 any Contract providing for future payments or the acceleration or vesting of payments that are conditioned, in whole or in part, on a change in control of any Acquired Company;

15.1.18 an Acquired Company has made advances or loans to any other Person, other than advances made to any employee of such Acquired Company in the Ordinary Course of Business; and

15.1.19 is for the supply of goods and/or services by or to any of the Acquired Companies on terms under which retrospective or future discounts, price reductions or other financial incentives are given.

15.2 Each of the contracts referred to in paragraph 15.1 of this Schedule 1 to which an Acquired Company is a party and each of the contracts between an Acquired Company and a Material Client or Material Supplier (“Material Contract”) is the legal, valid and binding obligation of the applicable Acquired Company, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights generally and by general equitable principles (regardless of whether enforcement is sought in a proceeding at law or in equity).

15.3 Each of the Material Contracts is in full force and effect, and the applicable Acquired Company is not and, to the Knowledge of the Warrantors, no other party to any such agreement is, in material default under any such agreement.

15.4 To the Warrantors’ Knowledge, no event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder.

15.5 Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to the Buyer.

15.6 No party with whom an Acquired Company has entered into a Material Contract has within the twelve (12) months immediately preceding the date of this Deed given notice in writing to such Acquired Company of its intention to terminate such Material Contract.

15.7 No Acquired Company is a party to any Contract having an annual value of not less than Two Hundred Fifty Thousand Dollars ($250,000), which in accordance with its terms may be terminated by the counterparty as a result of a change of Control of any of the Acquired Companies.

16. KEY RELATIONSHIPS

16.1 Section 16.1 of the Disclosure Letter sets forth a list of each of the top 30 customers of the Acquired Companies by annual recurring revenue (as calculated in August 2018) (“Material

50 Client”). As of the date of this Deed, none of the Acquired Companies has received any written notice from any Material Clients that such Material Client has ceased to use, or intends to cease to use the respective services of the Acquired Companies after Completion or to otherwise terminate or materially (in the context of the relevant Material Client relationship) reduce or modify their relationship with any Acquired Company (whether related to payment, price or otherwise).

16.2 Section 16.2 of the Disclosure Letter sets forth a list of those suppliers of the Acquired Companies which, in the Warrantors’ reasonable opinion, are key to the service offerings of the Acquired Companies (“Material Supplier”). During the previous twelve (12) months, none of the Acquired Companies has received any written notice that any of their respective Material Suppliers has ceased, or intends to cease, to supply goods or services to any Acquired Company or to otherwise terminate or materially (in the context of the relevant Material Supplier relationship) reduce their relationship with any Acquired Company.

17. RELATED PARTY TRANSACTIONS

Except for (a) employment agreements entered into with employees in the Ordinary Course of Business or (b) participation in equity incentive plans by employees, (c) any shareholders' agreement entered into in relation to the Company and (d) any other agreement or instrument pursuant to which any convertible security has been issued or granted to any shareholder of the Company, no Contract, relationship or other agreement, arrangement or transaction exists involving any Acquired Company, on the one hand, and the Warrantors, any shareholder of the Warrantors, any Affiliate of the Warrantors (other than the Acquired Companies or their shareholders), any director or any officer, or members of such individuals’ immediate families, or any enterprise in which a substantial interest in the voting power is owned, directly or indirectly, by such individuals, any customer or supplier, on the other hand (each a “Related Party Contract”).

18. EMPLOYEES

18.1 Each Acquired Company is in compliance with all Laws applicable to them relating to the employment of labor and employment practices, including all applicable Laws relating to labor relations, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, including the Immigration Reform and Control Act, wages, hours, overtime compensation, holiday pay, sick pay, wage statements, payment and required publication of wages equitably based on gender, race, and ethnicity, working during rest days, child labor, hiring, promotion and termination of employees, worker classification (including the proper classification of workers as independent contractors), working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence, unemployment insurance, equal opportunity and collective bargaining.

18.2 Section 18.2 of the Disclosure Letter sets forth a true, correct and complete list (anonymized in so far as necessary to comply with applicable data protection laws) of all employees, workers, independent contractors, and other non-employee service providers currently

51 performing services for each Acquired Company, and information indicating whether the Person is an employee, worker, consultant or independent contractor and, as applicable, each Person’s (i) job title, (ii) location, (iii) commencement date of service with the Acquired Company, (iv) full-time or part-time classification, (v) for U.S. based individuals, exempt or non- exempt classification, (vi) hours of work per week (for all non U.S. based individuals and all US based non-exempt and part time employees), (vii) base compensation and benefits, (viii) bonus and commission eligibility, (ix) confirmation of right to work, and (x) the length of notice necessary to terminate employment or engagement or, if a fixed term, the expiry date of that fixed term and details of any previous renewals.

18.3 Complete and correct copies of (i) the terms of employment or engagement applicable to those employees, independent contractors or consultants of any Acquired Company whose base salary or compensation exceeds Two Hundred Fifty One Thousand Dollars ($251,000), (ii) the standard terms and conditions of employment utilized by any Acquired Company for employees; and (iii) the staff handbook(s) and any other material staff policies or procedures applicable to employees of the Acquired Companies have been made available to the Buyer (anonymized in so far as necessary to comply with applicable data protection laws).

18.4 Within the past three (3) years, there have been no pending or, to the Warrantors’ Knowledge, threatened labor or employment disputes brought or filed by any Person or Governmental Body in connection with the employment of any current or former applicant, employee, worker, consultant, or independent contractor of any Acquired Company, including any claims alleging unlawful harassment, employment discrimination (including discrimination based upon sex, gender, gender identity, gender expression, race, citizenship, disability, pregnancy, religion, religious creed, national origin, age, sexual orientation, whistleblowing or any other characteristic protected by applicable Law), unfair labor practices, unpaid wages, unlawful wage or immigration practices, wrongful termination, or unlawful Tax withholding practices regarding the Acquired Companies (or their representatives) any of which could reasonably be expected to result in a material liability.

18.5 To the Warrantors’ Knowledge, none of the Acquired Companies’ employees are subject to any non-compete, non- solicitation, non-disclosure, confidentiality, employment, consulting or similar contracts in conflict with the business of any Acquired Company. No Acquired Company has received any written notice alleging that any violation of any such contracts has occurred.

18.6 Within the past three (3) years, no Acquired Company has (i) in respect of US-based individuals implemented any “mass layoff” or “plant closing” as those terms are defined in the Worker Adjustment and Retraining Notification Act of 1988, as amended (“WARN”), or (ii) in respect of non-US-based individuals engaged in any comparable conduct under any applicable state or non-U.S. Law (including any proposed collective redundancy process for the purposes of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULR(C)A”)), or taken any other action that could result in a violation of WARN,

52 TULR(C)A or any comparable state or non-U.S. Law, and no such action shall be implemented without advance notification to the Buyer.

18.7 No current director, officer, employee, worker or independent contractor employed or engaged by any Acquired Company has given or received notice terminating his employment or engagement, and Completion will not entitle any such director, officer, employee, worker or independent contractor to terminate his employment or engagement or trigger any entitlement to a severance payment or liquidated damages.

18.8 No Acquired Company is or has at any time been a party to or otherwise bound by any collective bargaining agreement or other agreement with a Union. Within the past three (3) years no Acquired Company has been subject to any demand, petition or representation proceeding seeking to compel, require or demand it to bargain with any Union nor is there pending or, to the Warrantors’ Knowledge, threatened in writing, any labor strike, walkout, work stoppage, slow-down or lockout involving an Acquired Company.

18.9 Within the past five (5) years, no Acquired Company has at any time been a party to a relevant transfer for the purposes of any national law under the EU Transfer of Undertakings Directive 2001/23/EC (including the Transfer of Undertakings (Protection of Employment) Regulations 2006) and no such transfer is proposed by any Acquired Company.

19. EMPLOYEE BENEFIT PLANS

19.1 Section 19.1 of the Disclosure Letter sets forth each US Benefit Plan.

19.2 Section 19.2 of the Disclosure Letter sets forth each Non-US Benefit Plan.

19.3 None of the Acquired Companies or any of their Affiliates intends to or has committed to establish or enter into any new Benefit Plan, or to modify or terminate any Benefit Plan (except to conform any such Benefit Plan to the requirements of any Law, in each case as previously disclosed to the Buyer in writing or as required by this Deed). None of the US Benefit Plans provides for post‑employment life or health insurance benefits for any participant or any beneficiary of a participant, except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (or similar state Law).

19.4 The Company has made available to the Buyer, to the extent applicable: (i) correct and complete copies of each material Benefit Plan, including all amendments thereto, and all related trust documents, (ii) the three most recent annual reports (Form Series 5500 and all schedules and financial statements attached thereto), if any, required under ERISA or the Code in connection with each US Benefit Plan, (iii) the most recent summary plan description, if any, required under ERISA with respect to each US Benefit Plan, (iv) all material written contracts relating to each Benefit Plan, including administrative service agreements and group insurance contracts, (v) all non-routine correspondence to or from any Governmental Body relating to any Benefit Plan, (vi) the most recent IRS determination or opinion letter with respect to any applicable US Benefit Plan and (vii) all insurance

53 policies in the possession of the Acquired Companies or any of their Affiliates pertaining to fiduciary liability insurance covering the fiduciaries for each Benefit Plan.

19.5 None of the Acquired Companies or any of their current or former ERISA Affiliates has in the six years prior to the date of this Agreement maintained, established, sponsored, participated in, or contributed to (or had an obligation to sponsor or contribute to) any: (i) pension plan subject to Title IV of ERISA, (ii) a “multiemployer plan” within the meaning of Section (3)(37) of ERISA, (iii) a “multiple employer plan” as defined in Section 413(c) of the Code, (iv) a plan subject to the minimum funding standards of Section 412 of the Code or Section 302 of ERISA, (v) a “multiple employer welfare arrangement” within the meaning of Section 3(40) of ERISA, (vi) a funded welfare plan within the meaning of Section 419 of the Code, or (vii) a plan maintained in connection with any trust described in Section 501(c)(9) of the Code.

19.6 Each Benefit Plan has been established, administered and maintained in all material respects in accordance with applicable Laws, including ERISA and the Code. Each US Benefit Plan that is intended to qualify under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS regarding its qualification thereunder, or may rely on an opinion letter issued by the IRS with respect to a prototype plan adopted in accordance with the requirements for such reliance, or has time remaining for application to the IRS for a determination of the qualified status of such Benefit Plan for any period for which such Benefit Plan would not otherwise be covered by an IRS determination and, to the Knowledge of the Warrantors, no event or omission has occurred that would cause any Benefit Plan to lose such qualification.

19.7 No “prohibited transaction,” within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of ERISA, has occurred or could reasonably be expected to occur with respect to any US Benefit Plan. There is no Action pending, or, to the Knowledge of the Warrantors, threatened (other than routine claims for benefits), against any Benefit Plan or against the assets of any Benefit Plan that could reasonably be expected to result in a material liability.

19.8 There is no Action pending or, to the Knowledge of the Warrantors, threatened by the IRS, U.S. Department of Labor, or any other Governmental Body with respect to any Benefit Plan. None of the Acquired Companies or any ERISA Affiliate has ever incurred any penalty or Tax with respect to any US Benefit Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the Code.

19.9 Each Non-U.S. Benefit Plan and related trust is, and has been operated in material compliance with the laws of the applicable country, its terms, and the terms of any collective bargaining, collective labor or works council agreements. Each Non-U.S. Benefit Plan which, under the laws of the applicable country, is required to be registered or approved by any Governmental Body, has been so registered or approved. Each Non-U.S. Benefit Plan intended to qualify for special tax treatment meets all the requirements for such treatment.

54 19.10 Except as expressly contemplated by this Deed, neither the execution and delivery of this Deed by the Company nor the consummation of the transactions contemplated hereby will (i) result in any payment becoming due to any employee of any Acquired Company, (ii) increase any benefits otherwise payable under any Benefit Plan or (iii) result in the acceleration of the time of payment or vesting of any such benefits under any such plan.

19.11 There have been no (i) disqualifying events in respect of EMI Options under Section 534 of ITEPA 2003, (ii) material amendments to any of the terms of any EMI Options, or (iii) any withdrawal of HM Revenue & Customs’ approval before 6 April 2014 of any EMI Options.

19.12 The Warrantors are not aware of (i) any failure to notify the grant of any EMI Options to HM Revenue & Customs within the required time limit under paragraph 44 of Schedule 5 of ITEPA 2003, or (ii) any dispute (or potential dispute) with HM Revenue & Customs as to whether any EMI Options are qualifying options for the purpose of paragraph 1(2) of schedule 5 of ITEPA 2003.

19.13 No employment-related securities (as defined in Sections 420 and 421B(8) of ITEPA 2003), including, without limitation, any shares acquired under section 205A of the Employment Rights Act 2003, have been issued or transferred and there are no agreements, schemes or promises to make any such issues or transfers (i) by any Acquired Company, (ii) under any arrangement established by any Acquired Company or (iii) by a shareholder of any Acquired Company (or under arrangements established by such a person) to any current, former or proposed employees or directors of any Acquired Company (or to associates of such employees or directors).

19.14 For any restricted securities (as defined in Section 423 of ITEPA 2003) acquired by any current employees or directors of any Acquired Company (or any nominees or associates of such employees or directors) a joint election to fully disapply Chapter 2 of Part 7 of ITEPA 2003 has been made under Section 431(1) of ITEPA 2003 and all such joint elections have been properly made using forms approved by HM Revenue & Customs and within the applicable time limits.

19.15 There are no other shares, securities or interests in them held by any or for any current employee or director of any Acquired Company (or any nominees or associates of such employees or directors), including, without limitation, any shares acquired under section 205A of the Employment Rights Act 2003, which (i) do not fall within this paragraph 19 of this Schedule 1 of this Deed, and (ii) may give rise to a liability of any Acquired Company to account for PAYE, income tax or national insurance contributions (or equivalent liabilities in another jurisdiction).

19.16 No loans have been made to any current, former or proposed employees or directors of any Acquired Company (or to any nominees or associates of such employees or directors) which were made or arranged by any Acquired Company or any employee benefit trust or similar arrangement established by any Acquired Company.

55 19.17 All reasonably foreseeable liabilities of any Acquired Company to account for PAYE or employee national insurance contributions (or equivalent liabilities in other jurisdictions) in connection with any securities, options, loans, employee benefit trust or similar arrangement are covered by enforceable contractual arrangements for those liabilities to be met in full by the relevant employee or director or some other person.

19.18 Section 19.18 of the Disclosure Letter contains details of all (i) agreements and joint elections made by the Company or any Subsidiary with any current employees or directors (or any nominees or associates of such employees or directors) for the reimbursement or transfer of employer national insurance contributions (or any similar liability in another jurisdiction), (ii) joint elections in respect of restricted securities made by the Company or any Subsidiary with any current employees or directors (or any nominees or associates of such employees or directors) under Chapter 2 of Part 7 of ITEPA 2003, and (iii) valuations of securities prepared in respect of any securities or options within 19.11 of this paragraph 19 of this Schedule 1 of this Deed and any agreements concerning such valuations reached with HM Revenue & Customs Shares and Assets Valuation.

20. PENSIONS

20.1 Other than the Defined Contribution Scheme, there is no scheme or arrangement in relation to which the Acquired Companies have incurred or may incur a legal obligation to make payments for or in relation to the provision of benefits on death or retirement in respect of or by reference to any employee or former employee, or any current or former director of the Acquired Companies and no proposal or announcement has been made by the Acquired Companies to any employee about the introduction, continuance, increase or improvement of, or payment of a contribution towards any such scheme, agreement, arrangement or practice.

20.2 Copies of documents containing details which are at least sufficient to enable the Buyer to form a fair and accurate assessment of the Defined Contribution Scheme have been Disclosed.

20.3 The Defined Contribution Scheme only provides benefits that are money purchase benefits within the meaning of section 181(1) of the Pension Schemes Act 1993.

20.4 No Acquired Company has, in relation to the Defined Contribution Scheme, received any written notice that it is in breach of or applicable laws (including without limitation sex and other discrimination laws and equal pay laws) nor has any Acquired Company received any notification that any such notice is threatened to be issued.

20.5 There has been disclosed in relation to the Defined Contribution Scheme full details of the eligibility, employer and employee contributions for employees of the Acquired Companies.

20.6 No contributions payable by the Acquired Companies to the Defined Contribution Scheme have fallen due but remain unpaid.

56 20.7 No Acquired Company nor to the Warrantors' Knowledge any connected or associated person participates or has in the last six years participated in any pension scheme to which the provisions of sections 38 to 51 of the Pensions Act 2004 apply.

20.8 No current employee of the Acquired Companies is employed by the Acquired Companies as a result of a "relevant transfer" (for the purposes of the Transfer of Undertakings (Protection of Employment) Regulations 1981 or 2006 as applicable) that occurred on or after 1 May 1982 where prior to that transfer that employee enjoyed rights under a pension arrangement that may be payable other than on old age, invalidity or death.

20.9 In relation to the Defined Contribution Scheme, there are no complaints under the internal disputes resolution procedure, complaints to any Ombudsman, reports to the Pensions Regulator, arbitrations, mediations, actions or claims in progress, pending or threatened and to the Warrantors’ Knowledge there is no fact or circumstances likely to give rise to such action or proceedings.

20.10 The Acquired Companies have complied with their obligations under the provisions of Part 1 of the Pensions Act 2008 relating to automatic enrolment.

20.11 No Contribution Notice or Financial Support Direction has been received by (or has been threatened to be issued against) any Acquired Company and to the Warrantors' Knowledge there are no facts or circumstances that could reasonably be expected to give rise to such notice or direction.

20.12 To the Warrantors’ Knowledge, the Disclosed Schemes have been operated and administered in accordance with the terms of its governing documentation, all legal obligations, and the requirements of all regulatory bodies, including, without limitation, the Pensions Regulator and HMRC.

21. REAL PROPERTY

21.1 No Acquired Company owns, or has ever owned, any real property.

21.2 Section 21.2 of the Disclosure Letter sets forth a list of all Contracts under which any of the Acquired Companies leases, subleases or otherwise occupies or uses any real property or any interest therein and all amendments thereto (each a “Lease” and collectively, the “Leases”) (such underlying property interests, with all easements and other rights appurtenant to such property, the “Leased Real Property”). The Company has delivered or made available to the Buyer true, complete and correct copies of each Lease.

21.3 With respect to each Leased Real Property:

21.3.1 the applicable Acquired Company has a valid and enforceable leasehold interest to the leasehold estate pursuant to each pertinent Lease, free and clear of any Encumbrances, other than Permitted Encumbrances;

57 21.3.2 each such Lease listed has been duly authorized and executed by the applicable Acquired Company;

21.3.3 none of the Acquired Companies is a sublessor of, or has assigned any lease covering, any item of Leased Real Property; and

21.3.4 no Acquired Company nor, to the Warrantors’ Knowledge, any other party to any Lease, is in material default under any of the Leases.

21.4 The Leased Real Property constitutes all interests of the Acquired Companies in real property currently used in connection with the respective businesses of the Acquired Companies.

22. MATERIAL LITIGATION

22.1 There are no Actions pending or, to the Warrantors’ Knowledge, threatened in writing (a) against or by the Acquired Companies or affecting any of their respective properties or assets (or by or against the Warrantors or any Affiliate of the Warrantors and relating to the Acquired Companies); or (b) against or by the Acquired Companies, the Warrantors or any Affiliate of the Warrantors that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Deed. To the Warrantors’ Knowledge, no event has occurred or circumstance exists that would reasonably be expected to give rise to, or serve as a basis for, any such Action.

22.2 There are no outstanding Governmental Orders and no unsatisfied judgments, penalties or awards against or affecting the Acquired Companies or any of their respective properties or assets.

23. COMPLIANCE WITH LAW

23.1 The Acquired Companies have complied, and are now complying, in all material respects, with all Laws applicable to them or their businesses, properties or assets, and to the Warrantors’ Knowledge, no facts or circumstances exist which would reasonably be expected to cause the Acquired Companies to violate or fail to comply in any material respect with any such Laws.

23.2 The Acquired Companies have not (i) received any written notice from any Governmental Body with respect to any alleged violation by the Acquired Companies of any applicable Law or (ii) entered into or been subject to any Governmental Order with respect to the Acquired Companies or their respective properties or assets, or received any written request for information, notice, demand letter, inquiry, complaint or claim from any Governmental Body with respect to the foregoing.

23.3 To the Warrantors’ Knowledge, none of the Warrantors, employees, consultants or agents of the Acquired Companies, in their respective capacities as such, has been charged, has received written notice or communication that he or she is or was, under investigation, by any Governmental Body with respect to any violations of any applicable Laws.

58 23.4 All Permits required for the Acquired Companies to conduct their businesses have been obtained by them and all Permits required for the Acquired Companies to conduct their businesses as currently conducted are valid and in full force and effect, and the Acquired Companies are in compliance in all material respects with such Permits.

23.5 All fees and charges with respect to such Permits as of the date hereof have been paid in full.

23.6 Neither the Acquired Companies, nor the Warrantors has received any written notification, regarding any actual or alleged failure to comply with any such Permit and no Action is pending or, to the Warrantors’ Knowledge, is threatened in writing to revoke, suspend deny, terminate, cancel, withdraw or limit any such Permit.

23.7 To the Warrantors’ Knowledge, no event has occurred and no circumstance exists that would reasonably be likely to result in a violation of or failure on the part of the Acquired Companies to comply with the terms of, or the revocation, withdrawal, termination, cancellation, suspension or modification of, any such Permit.

24. ANTI-MONEY LAUNDERING LAWS AND SANCTIONS AND EXPORT COMPLIANCE

24.1 None of the Acquired Companies, or their respective officers, directors, or employees, or to the Knowledge of the Warrantors, any agent of any of the Acquired Companies, is a Prohibited Person.

24.2 None of the Acquired Companies is a party to any Contract or bid with, or has conducted any business directly or indirectly within the past five (5) years involving, (i) an OFAC Sanctioned Country or (ii) any Prohibited Person.

24.3 Each of the Acquired Companies (i) is in compliance in all material respects with all applicable Anti-Money Laundering Laws and Sanctions and Export Laws and (ii) has instituted and maintains policies and procedures designed to promote and achieve compliance with all applicable Anti-Money Laundering Laws and Sanctions and Export Laws.

24.4 No notice has been received by any of the Acquired Companies nor, to the Knowledge of the Warrantors, is there any threatened claim or investigation against any of the Acquired Companies, nor has any Governmental Order been imposed (or, to the Knowledge of the Warrantors, is any such order threatened to be imposed) upon the businesses of the Acquired Companies by or before any Governmental Body, nor pending voluntary disclosure to any Governmental Body, in each case, in connection with an alleged violation of any Anti-Money Laundering Law or any Sanctions and Export Law.

25. ANTI-CORRUPTION LAWS; CERTAIN REGULATORY MATTERS

59 25.1 None of the Acquired Companies, or their respective officers, directors or employees, or, to the Knowledge of the Warrantors, any agent of the Acquired Companies, in the past five (5) years either (i) violated any Anti-Corruption Laws or (ii) offered, paid, promised to pay, or authorized the payment of any money, or offered, gave, promised to give, or authorized the giving of anything of value, including cash, checks, wire transfers, tangible and intangible gifts, favors, services, and those entertainment and travel expenses that go beyond what is reasonable and customary and of modest value:

25.1.1 to any FCPA Government Official, whether directly or through any other Person, for the purpose of: (i) influencing any act or decision of a FCPA Government Official in his or her official capacity; (ii) inducing a FCPA Government Official to do or omit to do any act in violation of his or her lawful duties; (iii) securing any improper advantage; (iv) inducing a FCPA Government Official to influence or affect any act or decision of any FCPA Governmental Authority or (v) assisting any Representative in obtaining or retaining business for or with, or directing business to, any Person;

25.1.2 to any Person under circumstances in which any of the Acquired Companies, or their respective officers, directors, employees, or vendors knew or had reason to know that all or a portion of such money or thing of value would be offered, given or promised, directly or indirectly, to any FCPA Government Official; or

25.1.3 to any Person in a manner which would constitute or have the purpose or effect of public or commercial bribery, or the acceptance of or acquiescence in extortion, kickbacks, or other unlawful or improper means of obtaining business or any improper advantage.

25.2 None of the Acquired Companies, or their respective officers, directors or employees, or, to the Knowledge of the Warrantors, any agent of the Acquired Companies, has, either (i) (A) conducted or initiated any review, audit, or internal investigation or (B) made a voluntary, directed, or involuntary disclosure to any Governmental Body responsible for enforcing Anti-Corruption Laws, in each case with respect to any alleged act or omission arising under or relating to noncompliance with any Anti- Corruption Law or (ii) received any notice, request, or citation from any Person alleging noncompliance with any Anti-Corruption Law.

26. SOLVENCY

26.1 No Acquired Company is insolvent or unable to pay (within the meaning of section 123 of the Insolvency Act 1986) its Third-Party Debts.

26.2 No order has been made, petition presented or resolution passed for the winding up of an Acquired Company or for the appointment of a liquidator or provisional liquidator to an Acquired Company.

60 26.3 No Acquired Company has received notice in writing that a floating charge created by any Acquired Company has crystallized.

26.4 No Acquired Company has proposed or agreed to a composition, compromise, assignment or arrangement with any of its creditors in the two year period prior to the date of this Deed.

26.5 No Acquired Company has received notice in writing that distress, execution or other process has been levied on any of its material assets.

27. BOOKS AND RECORDS

The minute books and record books of the Acquired Companies, all of which have been made available to the Buyer, are complete and correct in all material respects. The minute books of the Acquired Companies contain materially accurate and complete records of all meetings, and actions taken by written consent of, the shareholders, the board of directors and any committees of the board of directors of the Acquired Companies, and no meeting, or action taken by written consent, of any such shareholders, board of directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. At Completion, all of those books and records will be in the possession of the Company

28. BROKERAGE OR COMMISSIONS

No Acquired Company has entered into any Contract, arrangement or understanding with any Person that may result in the obligation of an Acquired Company to pay any finder’s fees, brokerage, investment banking or agent’s commissions or other like payments in connection with this Deed or the Offer.

29. LEAKAGE

From (and excluding) the Locked Box to (and including) the date of this Deed, there has been no Leakage other than Permitted Leakage.

61 SCHEDULE 2 LIMITATIONS AND REMEDIES

1. TIME LIMITS FOR BRINGING CLAIMS

1.1 The Management Warranties shall survive Completion. The Buyer will not be entitled to bring any Claim:

1.1.1 unless the Buyer notifies the Warrantors of the Claim in accordance with paragraph 1.2 of this Schedule 2 in any event on or before the expiry of:

(a) the full period of applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof) in respect of the Fundamental Warranties and the Management Warranties set forth in paragraph 8 of Schedule 1 (Tax) and paragraph 19 of Schedule 1 (Employee Benefit Plans); or

(b) 36 months after the Completion Date in respect of any Claim for breach of Clauses 6.1 to 6.8; and

(c) 18 months after the Completion Date in respect of all other Claims,

1.1.2 which is not satisfied, settled or withdrawn within six months of the date of notification of such Claim under sub-paragraph 1.1.1 of this Schedule 2 unless proceedings in respect of it have been commenced by being both issued and served on the relevant Warrantors and which the Buyer undertakes to pursue as soon as reasonably practicable upon giving notice pursuant to paragraph 1.2 of this Schedule 2.

1.2 If the Buyer becomes aware of any fact, matter or circumstance which gives rise or could give rise to a Claim, the Buyer shall, as soon as reasonably practicable on becoming aware of such fact, matter or circumstance, give notice to the Warrantors of that fact, matter or circumstance (including reasonable details of such fact, matter of circumstance, the due date for any payment and so far as practicable the amount in respect of which a Claim may be made), but the failure to include such details shall not prejudice the Buyer’s right to seek recovery or compensation for any such Claim or potential Claim).

2. LIMITATION ON QUANTUM

2.1 Except for claims arising from fraud or fraudulent misrepresentation, any Damages for which the Warrantors shall be liable pursuant to a Warranty Claim shall be satisfied only by recovery by the Buyer under the W&I Insurance Policy. The Warrantors shall be directly liable to the Buyer for Damages up to an amount not to exceed the Cap, up to their respective Allocable Share. It is acknowledged by the Buyer that its only recourse for its losses in respect of all such Warranty Claims in excess of the Cap shall be solely under the W&I Insurance Policy

62 and it shall seek recovery of all such Warranty Claims in excess of the Cap under the W&I Insurance Policy.

2.2 For purposes of determining (i) whether there has been any misrepresentation or breach of a representation or warranty and (ii) the amount of any Damages resulting therefrom, all qualifications or exception in any representation or warranty relating to or referring to the terms “material”, “materiality”, “Material Adverse Effect”, “in all material respects” or any similar qualification, term or phrase shall be disregarded.

2.3 The Buyer will not be entitled to bring any Claim for any breach of Clause 3.1 unless the aggregate amount of such Claims exceeds $175,000, in which case the Warrantors will be liable for whole amount (and not just the excess).

2.4 Without prejudice to any other provisions of this Deed, the total aggregate liability (including interest, costs and expenses) of each Warrantor in respect of any and all Claims shall not, in any event, exceed the Aggregate Cap and shall (other than in respect of a Claim under Clause 6.1 to 6.8) be limited to their Allocable Share of any Damages in respect of any such Claim.

2.5 No Warrantor shall be liable in respect of any Warranty Claim to the extent that it relates to a matter Disclosed in the Disclosure Letter and/or the Data Room in accordance with Clause 4.3 or the Buyer has or had actual knowledge of the Warranty Claim or of the matters giving rise to the Warranty Claim on or before the date of this Deed (and the Buyer agrees and undertakes not to make any Warranty Claim where such knowledge exists or existed). For the purpose of this paragraph, the Buyer’s knowledge shall be deemed to be limited to the actual knowledge of each of Alan Masarek, David Pearson, Randy Rutherford, Vinod Lala and Omar Javaid immediately prior to the execution of this Deed.

3. CONTINGENT LIABILITIES

The Warrantors shall not be liable in respect of any contingent liability in relation to any Claim unless and until such contingent liability becomes an actual liability and is due and payable. This is without prejudice to the right of the Buyer to give notice of the Claim to the Warrantors’ Representative notwithstanding the fact that the liability may not have become an actual liability. The fact that the liability may not have become an actual liability within the time limits provided in paragraph 1 of this Schedule 2 shall not exonerate the Warrantors in respect of any Claim properly notified within such time limits.

4. CONDUCT OF THIRD-PARTY CLAIMS

4.1 If the Buyer becomes aware of any claim by a third party (a “Third-Party Claim”) after Completion which is likely to result in a Warranty Claim, the Buyer shall promptly give notice of the Third-Party Claim to the Warrantors’ Representative and, subject to the Buyer and each of its Affiliates being indemnified to the Buyer’s reasonable satisfaction in writing by the Warrantors against all reasonable costs and expenses, including those of its legal

63 advisers, incurred in respect of that Third Party Claim, shall and shall procure that the Acquired Companies shall:

4.1.1 not make any knowing admission of liability or make any agreement or compromise in relation to that Third Party Claim without prior consultation with the Warrantors’ Representative; and

4.1.2 (subject to the Warrantors having accepted liability to the Buyer in respect of the Warranty Claim in writing and the Buyer being entitled to engage its own legal advisers) take such action as the Warrantors’ Representative may reasonably request to avoid, resist, dispute, appeal, compromise, remedy or defend that Third Party Claim, except where, in the reasonable opinion of the Buyer, such action would be materially prejudicial to the business of the Buyer or any of the Acquired Companies or would be misleading or inaccurate in any material respect.

4.2 The rights of the Warrantors’ Representative under this paragraph 4 of this Schedule 2 shall only apply to a Third-Party Claim if the Warrantors’ Representative gives notice to the Buyer in writing of its intention to exercise its rights within 10 Business Days of the Buyer giving notice of the Third-Party Claim. If the Warrantors’ Representative does not give notice during that period, the Buyer shall be entitled in its absolute discretion to settle, compromise, or resist any action, proceedings or claim against the Buyer, its Affiliates or any of the Acquired Companies out of which that Third-Party Claim arises.

5. WARRANTOR ACCESS

In the event of a Claim, the Buyer shall, subject to the Warrantors giving such undertakings as to confidentiality as the Buyer may reasonably require, procure that the Warrantors’ Representative is provided, upon reasonable notice and during normal business hours, access to such information, records, premises and personnel of the relevant Acquired Companies as the Warrantors’ Representative may reasonably require (not being any which would otherwise be subject to legal privilege) to investigate, avoid, remedy, dispute, resist, appeal, compromise or contest such Claim.

6. NO DUPLICATION OF RECOVERY

The Buyer shall not be entitled to recover damages or obtain payment, reimbursement, restitution or indemnity more than once in respect of the same Damages, regardless of whether more than one Claim (or any other claim under the Offer Document or otherwise) arises in respect of it.

7. EXCLUSIVE REMEDY

The Buyer and the Warrantors acknowledge and agree that their sole and exclusive remedy following Completion with respect to any breach of this Deed (other than claims arising from fraud or fraudulent misrepresentation) shall be pursuant to the provisions set forth in

64 this Schedule 2, and the Buyer will not be entitled to rescind or repudiate this Deed or the Offer or to recover damages in tort or for misrepresentation (except in the case of fraud); provided, further, that nothing in this paragraph 7 of this Schedule 2, or in any other provision of this Deed, shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled under Clause 6.4 or to seek any remedy on account of any party’s fraud or willful misconduct.

8. W&I INSURANCE POLICY PROCESS

Notwithstanding anything herein to the contrary, except for claims arising from fraud, any claims by the Buyer under the W&I Insurance Policy shall be asserted and resolved in compliance with the procedures set forth in the W&I Insurance Policy. Any objections by the provider under the W&I Insurance Policy for any claim brought by the Buyer under the W&I Insurance Policy, as well as the resolution of any disputes related thereto, shall also proceed in accordance with the procedures set forth in the W&I Insurance Policy. The Buyer shall provide to the Warrantors’ Representative, concurrently with delivery to the requisite parties under the W&I Insurance Policy, copies of any claim submitted by the Buyer pursuant to the W&I Insurance Policy.

9. RECOVERY FROM INSURANCE

9.1 The Warrantors will not be liable in respect of any Claim to the extent that the amount of such Claim is actually recovered (after taking into account any costs, expenses and any irrecoverable Taxes incurred in obtaining such recovery) under any policy of insurance in force prior to or after the date of this Deed.

9.2 If the Buyer and/or an Acquired Company are at any time entitled under an insurance policy to recover any sum in respect of any matter giving rise to a Claim (whether before or after the Warrantors have made a payment hereunder), the Buyer will first take, or procure that the Acquired Company takes steps to enforce such recovery and thereafter any Claim against the Warrantors will be limited (in addition to the other limitations in this Schedule 2) to the amount by which the loss or damage suffered by the Buyer as a result of the matter giving rise to the Claim exceeds the amount so recovered.

10. RELEASE

10.1 Each Warrantor on behalf of itself and any of its predecessors, Affiliates, successors and assigns, and any of their respective past, present or future Representatives (the “Releasing Party”), irrevocably and unconditionally fully and forever waives, releases and discharges the Buyer and any of its Affiliates (including the Acquired Companies after Completion), successors and assigns (the “Released Party”) from any and all actions, costs, expenses, losses, liabilities, penalties, damages, claims, and demands, of every kind and nature whatsoever, whether now known or unknown, foreseen or unforeseen, actual or contingent (collectively, “Claims”) which relate to or arise out of the Releasing Party’s rights as a shareholder of the Company or any rights or commitments to any Equity Interest in the Acquired Companies, other than any Claims which arise out of (a) this Deed or the Offer

65 Document or (b) any compensation or related benefits earned by the Releasing Party in his or her capacity as an employee of the Acquired Companies.

10.2 Nothing in this Deed will in any way restrict or limit the general obligation at law of the Buyer to mitigate any loss or damage which it may suffer in consequence of any breach by any of the Warrantors of this Deed.

10.3 No Claim for any breach of Clause 3.1 shall be admissible and no Warrantor shall be liable in respect of such only to the extent that any such claim by the Buyer or the subject matter thereof has been or is made good or is otherwise compensated in full (otherwise than by the Buyer or any of its Affiliates or any Acquired Company) at no cost or liability to the Buyer or any of its Affiliates or any Acquired Company within 30 Business Days of the matter, event, fact or circumstance giving rise to that such claim occurring (or failing to occur).

11. WARRANTORS’ REPRESENTATIVE

11.1 Each Warrantor appoints Dennis Fois and Guy Sochovsky (acting jointly) to act as the initial Warrantors’ representatives (the “Warrantors’ Representatives”) under this Deed.

11.2 Each Warrantor hereby appoints the Warrantors’ Representatives as such Warrantor’s true and lawful attorneys (acting jointly), with full power of substitution and resubstitution, in such Warrantor’s name, place and stead, in any and all capacities, in connection with this Deed, granting to said attorneys full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection with the Offer as fully to all intents and purposes as such Warrantor might or could do in person.

11.3 The Warrantors’ Representatives shall have the full power and authority on behalf of the Warrantors, jointly and not severally, to take any and all actions and make any and all determinations in respect of this Deed. Without limiting the generality of the foregoing, each Warrantor hereby authorizes the Warrantors’ Representatives to (i) negotiate, execute and deliver all amendments, modifications and waivers to this Deed, (ii) take all actions on behalf of the Warrantors in connection with any claims or disputes with respect to this Deed, and (iii) accept notices on behalf of the Warrantors.

11.4 No Warrantor will be permitted to take any action pursuant to this Deed without the prior written approval of the Warrantors’ Representatives.

11.5 The Warrantors’ Representatives will not receive a fee for serving as the Warrantors’ Representatives under this Deed.

11.6 The Warrantors’ Representatives will be entitled to engage counsel and other advisors, and the reasonable fees and expenses of such counsel and advisors will be paid by the Warrantors.

11.7 The Warrantors’ Representatives will not be liable to any Warrantor for any action taken by them (or either of them) pursuant to this Deed and the Warrantors will jointly and severally indemnify and hold the Warrantors’ Representatives harmless from any Damages arising

66 out of the Warrantors’ Representatives serving as the Warrantors’ Representatives under this Deed, except, in each case, if and to the extent the Warrantors’ Representatives has engaged in fraud as finally determined by a court of competent jurisdiction.

11.8 Any Person serving as a Warrantors’ Representative under this Deed may resign as a Warrantors’ Representative upon at least ten (10) days prior written notice to the Warrantors and the Buyer. All rights of a Warrantors’ Representative to indemnification under this Deed will survive such Warrantors’ Representative’s resignation or removal.

11.9 The Warrantors will indemnify, hold harmless and reimburse the Warrantors’ Representatives for all costs and expenses incurred by the Warrantors’ Representatives acting in such capacity under this Deed (with such amount allocated among the Warrantors based on their respective Allocable Share of such amount).

11.10 As the representative of the Warrantors, the Warrantors’ Representatives shall act as the agent for all the Warrantors and shall have authority to bind each Warrantor in accordance with this Deed, and the Buyer may rely on such appointment and authority until the receipt of notice of the appointment of a successor upon five (5) Business Days’ prior written notice to Buyer.

67 SCHEDULE 3 CONDUCT OF BUSINESS PENDING COMPLETION

1. BUYER’S RIGHT OF ACCESS

1.1 From the date of this Deed the Buyer, and up to ten individuals authorised by it (or such additional persons authorized in writing by the Warrantors’ Representative), shall after giving reasonable notice to the Company be allowed reasonable access during normal business hours and so as to minimize the disruption caused to the Business to all the Leased Real Property, premises, books and records of each Acquired Company, and the Company shall supply or procure the supply of any information reasonably required by the Buyer relating to each Acquired Company and their respective affairs, in each case at the Buyer’s cost and solely in connection with consummating the transactions contemplated by the Offer (or such other purpose approved in writing by the Warrantors’ Representative), provided in each case that nothing in this paragraph shall require the Company or the Warrantors to carry out any act or omission or provide or otherwise give access to any information which may cause it to waive or result in the waiver of any legal privilege in any documentation or information subject to legal privilege.

1.2 The Buyer shall not and shall procure that none of its Affiliates or any of its or their Representatives shall make use of or divulge to any other person any confidential information relating to any Acquired Company which the Buyer may obtain in the exercise of its rights under paragraph 1.1 of this Schedule 3. Such obligation shall cease to apply with effect from Completion in respect of all such confidential information, whenever obtained, but should Completion not take place such obligation shall continue without limit of time.

2. CONDUCT OF COMPANY’S BUSINESS PENDING COMPLETION

2.1 From the date of this Deed until Completion (both dates inclusive) the Company and (to the extent of their respective rights as a Shareholder or as a director of any Acquired Company) each of the Warrantors shall procure that:

2.1.1 the Business is carried on in the Ordinary Course of Business;

2.1.2 they shall use their reasonable endeavours to preserve the goodwill of the Business and encourage customers and suppliers to continue to deal with them and shall do nothing which will or would be reasonably likely to materially damage such goodwill; and

2.1.3 no Acquired Company shall, without the prior consent in writing of the Buyer (such consent not to be unreasonably withheld or delayed in respect of the matters set out in sub-paragraphs (d), (g), (h), (l), (m), (n) or (s) below):

(a) make any alteration to its memorandum or articles of association or its constitution; or

68 (b) create, allot or issue, repay or redeem or grant any option over any shares or loan capital or securities convertible into shares, or modify the rights attaching to any of its issued shares or loan capital, or purchase any of its shares or loan capital or reduce its share capital; or

(c) alter the nature or scope of its Business; or

(d) enter into any transaction other than on arms’ length terms and for full and proper consideration; or

(e) acquire (whether by one transaction or by a series of transactions) the whole or a substantial or material part of the business, undertaking or assets of any other person; or

(f) dispose of (whether by one transaction or by a series of transactions related or not) and whether or not in the ordinary course of business the whole or any substantial or material part of its business, undertaking or (except in the ordinary course of business) assets; or

(g) incur any capital expenditures in excess of One Hundred Fifty Thousand Dollars ($150,000) individually or Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate;

(h) other than in respect of drawing down less than $500,000 under the SVB Facilities, take any loans, borrowings or other form of funding or financial facility or assistance, or enter into any foreign exchange contracts, interest rate swaps, collars, guarantees or agreements or other interest rate instruments or any contracts or arrangements relating to derivatives or differences (other than normal trade credit or between another Acquired Company); or

(i) grant any loans or other financial facilities to, or any guarantees for the benefit of, any person, or create any Encumbrance (other than a Permitted Encumbrance) over the whole or any part of its undertaking, property or assets; or

(j) enter into any joint venture, partnership or other agreement or arrangement for the sharing of profits or assets; or

(k) enter into any death, retirement, pension, profit sharing, bonus, share option, share incentive or other similar scheme for the benefit of any of its officers or employees or make any variation (including, but without limitation, any increase in the rates of contribution) to any such existing scheme or effect any key man insurance; or

(l) commence, compromise, settle, waive a right in respect of or discontinue any legal or arbitration proceedings (other than routine debt collection) where the

69 financial exposure of, or payment to, the Acquired Company is reasonably likely to be in excess of One Hundred Fifty Thousand Dollars ($150,000); or

(m) prematurely repay or prepay or amend the terms of any loans, borrowings or other financial facilities made available to it or change its policy in relation to the payment of creditors; or

(n) terminate the employment or office of any of its Key Employees or appoint any person who is not already an employee of an Acquired Company and whose annual salary would exceed One Hundred Thousand Dollars ($100,000) or materially alter the terms of employment or engagement of any Key Employee; or

(o) declare, make or pay any dividend or distribution (whether of capital or of profits); or

(p) enter into any agreement or arrangement with, or materially vary any existing agreement or arrangement with any Shareholder or any Affiliate of any Shareholder not on arms’ length terms or outside the Ordinary Course of Business; or

(q) fail to maintain in force all its Insurance Policies at their current or better level of cover or to pay all premiums which may become due in respect thereof;

(r) do anything to affect the continuation and validity of all licences and consents upon which the Business depends or fail to renew any such licence or consent;

(s) make any material alterations to any of the leased Real Property or terminate or giving a notice to terminate any lease or licence under which any such Leased Real Property is held or varying the terms thereof;

(t) make any change to its accounting reference date or to any accounting procedures or policies or basis of drawing up accounts;

(u) make any Leakage other than Permitted Leakage;

(v) enter into, grant or materially modify or agree to terminate any rights or enter into any agreement relating to the Intellectual Property Rights or otherwise allow any of its rights relating to Intellectual Property Rights to lapse in each case other than in the Ordinary Course of Business;

(w) enter into any agreement or obligation to do anything prohibited by the foregoing paragraphs.

2.1.4 Nothing in this Schedule 3 shall restrict or prevent any act or omission by any Person:

70 (a) as a result of, or to comply with, any applicable law and/or regulation;

(b) in due performance of any agreement or other obligation entered into by or otherwise binding on that person as Disclosed in the Data Room or Disclosure Letter prior to the date of this Deed;

(c) pursuant to any matter expressly permitted by this Deed or required to give effect to, implement or complete the Offer;

(d) any allotment and issuance of Shares pursuant to the Company Stock Options;

(e) any matter reasonably undertaken by any Acquired Company in an emergency or disaster situation with the bona fide intention of, and to the extent only of those matters strictly required with a view to, minimising any adverse effect of any steps or measures taken and preserving value of the Acquired Companies for the benefit of the Buyer, provided that the Buyer is immediately notified thereof and is, as far as reasonably practicable, consulted in advance in relation to such steps or measures;

(f) any matter undertaken at the written request of or with the prior consent of the Buyer; and/or

(g) pursuant to any matter specifically and expressly contemplated in the Business Plan.

71 SCHEDULE 4 WARRANTORS

Name Contact Details Allocable Share Aggregate Cap (1) (2) (3) (4) $650,639 Dennis Fois 3561 Jackson St. 48.9%

San Francisco

CA 94118 United States E-mail: [email protected]

$366,014 Guy Sochovsky 427 Riviera Circle 27.5%

Larkspur

CA 94939 United States E-mail: [email protected]

$112,151 Artur Michalczyk 20 The Courtyard 8.4%

Beggarwood

Basingstoke

Hampshire

RG22 4FJ United Kingdom

E-mail: [email protected]

$128,115 Moni Manor 1508 Wildrose Way 9.6%

Mountain View

CA 94043 United States

E-mail: [email protected]

$74,719 Fiona Talbot Flat 319 5.6%

Ben Jonson House

Barbican

London

Middlesex

EC2Y 8NQ United Kingdom

E-mail: [email protected]

72 73 This document has been executed as a deed and is delivered and takes effect on the date stated at the beginning of it.

EXECUTED and DELIVERED ) /s/ Dennis Fois as a DEED by ) DENNIS FOIS ) In the presence of: )

Signature of Witness: /s/ Guy Sochovsky

Name of Witness: Guy Sochovsky

Address of Witness: 427 Riviera Circle

Larkspur, CA 94939

[Signature page to the Management Warranty Deed] 75 EXECUTED and DELIVERED ) /s/ Guy Sochovsky as a DEED by ) GUY SOCHOVSKY ) In the presence of: )

Signature of Witness: /s/ Dennis Fois

Name of Witness: Dennis Fois

Address of Witness: 3561 Jackson St.

San Francisco, CA 94118

[Signature page to the Management Warranty Deed] 77 EXECUTED and DELIVERED ) /s/ Artur Michalczyk as a DEED by ) ARTUR MICHALCZYK ) In the presence of: )

Signature of Witness: /s/ Fiona Talbot

Name of Witness: Fiona Talbot

Address of Witness: Flat 319, Ben Jonson House

Barbican, London, Middlesex EC2Y 8NQ United Kingdom

[Signature page to the Management Warranty Deed] 79 EXECUTED and delivered ) /s/ Moni Manor as a DEED by ) MONI MANOR ) In the presence of: )

Signature of Witness: /s/ Guy Sochovsky

Name of Witness: Guy Sochovsky

Address of Witness: 427 Riviera Circle

Larkspur, CA 94939 United States

[Signature page to the Management Warranty Deed] 81 EXECUTED and DELIVERED ) /s/ Fiona Talbot as a DEED by ) FIONA TALBOT ) In the presence of: )

Signature of Witness: /s/ Artur Michalczyk

Name of Witness: Artur Michalczyk

Address of Witness: 20 The Courtyard, Beggarwood

Basingstoke, Hampshire RG22 4FJ United Kingdom

[Signature page to the Management Warranty Deed] 83 EXECUTED and DELIVERED ) as a DEED by ) NEWVOICEMEDIA LIMITED ) acting by Dennis Fois, /s/ Dennis Fois a director, in the presence of: Director

Signature of Witness: /s/ Guy Sochovsky

Name of Witness: Guy Sochovsky

Address of Witness: 427 Riviera Circle

Larkspur, CA 94939 United States

[Signature page to the Management Warranty Deed] EXECUTED and DELIVERED ) as a DEED by ) VONAGE HOLDINGS CORP. ) acting by David T. Pearson, /s/ David T. Pearson Chief Financial Officer

[Signature page to the Management Warranty Deed] EXHIBIT 31.1

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Alan Masarek, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Vonage Holdings Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 2, 2018 /s/ Alan Masarek

Alan Masarek

Chief Executive Officer EXHIBIT 31.2

CERTIFICATION

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, David T. Pearson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Vonage Holdings Corp.; 2. Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 2, 2018 /s/ David T. Pearson

David T. Pearson

Chief Financial Officer EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Alan Masarek, certify to my knowledge pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Vonage Holdings Corp. on Form 10-Q for the quarterly period ended September 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Vonage Holdings Corp.

Date: November 2, 2018 /s/ Alan Masarek

Alan Masarek

Chief Executive Officer

I, David T. Pearson, certify to my knowledge pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Vonage Holdings Corp. on Form 10-Q for the quarterly period ended September 30, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Vonage Holdings Corp.

Date: November 2, 2018 /s/ David T. Pearson

David T. Pearson

Chief Financial Officer