DELTATHREE,
INC.

     

    2009
STOCK INCENTIVE PLAN

    


    NONSTATUTORY STOCK OPTION
GRANT

    102
CAPITAL GAINS TRACK GRANT

    UNDER
SECTION 102(B)(2) OF THE ISRAELI INCOME TAX ORDINANCE

     

    This
NONSTATUTORY STOCK OPTION GRANT AGREEMENT (the “Agreement”), dated as
of _________________ (the “Grant Date”), is delivered
by deltathree, Inc. (the “Company”) to
_______________ (the “Participant”).  Capitalized
terms used herein and not otherwise defined herein have the meaning given to
them in the Plan (as defined below).

     

    RECITALS

     

    WHEREAS,
the Company maintains the deltathree, Inc. 2009 Stock Incentive Plan, including
Appendix A – Israeli Participants thereto (the “Plan”) for the
benefit of its and its Affiliates’ employees, directors, and
consultants;

     

    NOW,
THEREFORE, in consideration of the covenants and agreements contained herein,
the parties to this Agreement, intending to be legally bound, hereby agree as
follows:

     

    1.           Grant of Option; Stock
Option Status; Compliance with Section 102
Requirements.

     

    (a)          Subject
to the terms and conditions set forth in this Agreement and in the Plan, the
Company hereby grants to the Participant a stock option (the “Option”) to purchase
___________ shares of Stock at an exercise price of $_________ per share of
Stock, subject to adjustment as set forth in Sections 8.1 and 8.2 of the Plan,
and subject to the terms and conditions of Section 102, the Plan  and
the trust agreement (the “Trust Agreement”), entered into between the Company
and [____________]_(the “Trustee”).  The Option is granted as a 102
Capital Gains Track Grant, as defined in Appendix A to the Plan.  This
Option is not intended to qualify as an Incentive Stock Option as defined in
Section 422 of the Code.

     

    (b)         The
Option will be registered in the name of the Trustee (to the extent required by
law to qualify under Section 102) for the benefit of the
Participant.  Participant shall comply with the ITO, the Rules, and
the terms and conditions of the Trust Agreement. The Trustee will hold the
Option or the shares of Stock to be issued upon exercise of the Option for the
Required Holding Period, as set forth in Appendix A to the Plan.  The
Participant hereby undertakes to release the Trustee from any liability in
respect of any action or decision duly taken by the Trustee (except for any such
actions or decisions taken in gross negligence or willful misconduct) in
relation to the Plan, or any Option or share of Stock granted to him
thereunder. The
Participant hereby confirms that he shall execute any and all documents which
the Company or the Trustee may reasonably determine to be necessary in order to
comply with the ITO and the Rules.


    
      
         


      

      
        
        

        
          

        

      

      
         


      

    

     

    2.          
Exercisability of
Option.   Subject to the provisions of this Agreement, the
Option shall become exercisable on the following dates, if the Participant
continues to provide Service (as defined in the Plan) to the Company or its
Affiliates from the Grant Date through the applicable date:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                        Date

                                    	 	
                                      Shares for Which the Option is
      Exercisable

                                    	 
	 	 	 	 	 
	
                                      First
      anniversary of the Grant Date

                                    	 	 	25	%
	 
      	 	 	 	 
	
                                      Second
      anniversary of the Grant Date

                                    	 	 	25	%
	 
      	 	 	 	 
	
                                      Third
      anniversary of the Grant Date

                                    	 	 	25	%
	 
      	 	 	 	 
	
                                      Fourth
      anniversary of the Grant Date

                                    	 	 	25	%


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    The
exercisability of the Option is cumulative, but shall not exceed 100% of the
shares of Stock subject to the Option.  If the foregoing schedule
would produce fractional shares of Stock, the number of shares of Stock for
which the Option becomes exercisable shall be rounded down to the nearest whole
share of Stock.

     

    3.           Term of
Option.

     

    (a)      
   The Option shall have a term of ten (10) years from the Grant
Date, and shall terminate at the expiration of that period, unless it is
terminated at an earlier date pursuant to the provisions of this Agreement or
the Plan.

     

    (b)         The
Option shall automatically terminate upon the happening of the first of the
following events:

     

     
(i)        If the Participant’s Service
terminates on account of death or Disability (as defined in the Plan), the
expiration of the one-year period following the date of the Participant’s
termination of Service on account of death or Disability.

     

     
(ii)       If the Participant’s Service
terminates for any reason other than on account of death, Disability, or
termination for Cause (as defined in the Plan), the expiration of the 90 day
period following the date of the Participant’s termination of Service for any
reason other than on account of death, Disability, or termination for
Cause.

     

     
(iii)      If the Participant’s Service is terminated
for Cause (unless the Committee determines otherwise), the date on which the
Participant’s Service is terminated.

     

    Notwithstanding
the foregoing, in no event may the Option be exercised after the tenth
anniversary of the Grant Date.  Any portion of the Option that is not
exercisable at the time the Participant ceases to provide Service shall
immediately terminate as of such date.


    
      
         


      

      
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    4.           Exercise
Procedures.

     

    (a)          Subject
to the provisions of Sections 2 and 3 above, the Participant may exercise part
or all of the exercisable portion of the Option by delivering to the Company
(or, if applicable, the Trustee) written notice of intent to exercise in the
manner provided in this Agreement (or in such other form as the Company and/or
the Trustee may from time to time prescribe), specifying the number of shares of
Stock as to which the Option is to be exercised and the method of
payment.  Payment of the exercise price shall be made in accordance
with procedures established by the Committee from time to time based on the type
of payment being made but, in any event, prior to issuance of the shares of
Stock.  The Participant shall pay the exercise price (i) in cash, by
check or cash equivalent; (ii) by tender to the Company of shares of Stock owned
by the Participant having a Market Value (as defined in the Plan) equal to the
exercise price of the shares of Stock to be purchased (to the extent permitted
under the terms of Section 102, as determined by the Committee); (iii) by
surrender of the Option as to all or part of the shares of Stock for which the
Option is then exercisable in exchange for shares of Stock having an aggregate
Market Value equal to the difference between the aggregate Market Value of the
surrendered portion of the Option and the aggregate exercise price for the
surrendered portion of the Option (to the extent permitted under the terms of
Section 102, as determined by the Committee); (iv) by payment through a broker
in accordance with procedures permitted by Regulation T of the Federal Reserve
Board; or (v) by any combination thereof.  The Committee may impose
from time to time such limitations as it deems appropriate on the use of shares
of Stock to exercise the Option.

     

    (b)         The
obligation of the Company to deliver shares of Stock upon exercise of the Option
shall be subject to all applicable laws, rules, and regulations and such
approvals by governmental agencies as may be deemed appropriate by the
Committee, including such actions as Company counsel shall deem necessary or
appropriate to comply with relevant securities laws and
regulations.  The Company may require that the Participant (or other
person exercising the Option after the Participant’s death) represent that the
Participant is purchasing the shares of Stock for the Participant’s own account
and not with a view to or for sale in connection with any distribution of the
shares of Stock, or such other representations as the Committee deems
appropriate.  No portion of the Option may be exercised during a
period which the Committee designates in writing as a prohibited exercise
period.

     

    (c)    
     The Company will notify the Trustee of any
exercise of an Option.  If such notification is delivered during the
Required Holding Period, the shares of Stock issued upon the exercise of the
Option shall be issued in the name of the Trustee and held in trust on the
Participant’s behalf by the Trustee.  In the event that such
notification is delivered after the end of the Required Holding Period, the
shares of Stock issued upon the exercise of the Options shall either (i) be
issued in the name of the Trustee, subject to the Trustee’s prior written
consent, or (ii) be transferred to the Participant directly, provided that all
withholding required under Section 102 has been withheld.  In the
event that the Participant elects to have the Shares transferred to the
Participant without selling such shares of Stock, the Participant shall become
liable to pay taxes immediately upon such transfer in accordance with the
provisions of Section 102.

     

    (d)         All
obligations of the Company under this Agreement shall be subject to the rights
of the Company as set forth in the Plan to withhold amounts required to be
withheld for any taxes.


    
      
         


      

      
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    5.           Change of Control or Other
Transaction.  In the event of a Transaction (as defined in the
Plan), there will not be any acceleration of vesting or exercisability of the
Option unless otherwise determined by the Committee.  The provisions
of the Plan applicable to a Transaction or a Change of Control (each as defined
in the Plan) shall apply to the Option, and, in the event of a Transaction or
Change of Control, the Committee may take such actions as it deems appropriate
pursuant to the Plan.

     

    6.           Restrictions on Transfer and
Exercise.  Except as otherwise provided in the Plan, the Option
shall not be transferable, and neither the Option nor any interest therein may
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated,
other than by will or by the laws of descent and distribution.  Only
the Participant or its legal representatives may exercise the Option during the
Participant’s lifetime and, after the Participant’s death, the Option shall be
exercisable (subject to the limitations specified in the Plan) solely by the
guardian or legal representatives of the Participant, or by the person who
acquires the right to exercise the Option by will or by the laws of descent and
distribution, to the extent that the Option is exercisable pursuant to this
Agreement.

     

    7.           Grant Subject to Plan
Provisions.  This Option grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with the Plan.  The grant and
exercise of the Option and this Agreement are subject to interpretations,
regulations and determinations concerning the Plan established from time to time
by the Committee in accordance with the provisions of the Plan, including, but
not limited to, provisions pertaining to (i) rights and obligations with respect
to withholding taxes, (ii) the registration, qualification or listing of the
shares of Stock, (iii) changes in capitalization of the Company, and (iv) other
requirements of applicable law.  The Committee shall have the
authority to interpret and construe the Option pursuant to the terms of the
Plan, and its decisions shall be conclusive as to any questions arising
hereunder.  By accepting this Option, the Participant agrees to be
bound by the terms of the Plan and this Agreement and that all decisions and
determinations of the Committee with respect to the Agreement shall be final and
binding on the Participant and the Participant’s beneficiaries.

     

    8.           Restrictions on Sale or
Transfer of Shares.

     

    (a)         The
Participant agrees that he or she shall not sell, transfer, pledge, donate,
assign, mortgage, hypothecate or otherwise encumber the shares of Stock
underlying the Option unless the shares of Stock are registered under the
Securities Act of 1933, as amended (the “Securities Act”) and
the laws of the applicable state or other jurisdiction, or the Company is given
an opinion of counsel reasonably acceptable to the Company that such
registration is not required under the Securities Act and the laws of the
applicable state or other jurisdiction.  Any stock issued upon
exercise of the Option may bear one or more legends reflecting the foregoing
restrictions or other restrictions imposed by the Plan or this
Agreement.

     

    (b)         As
a condition to receive any shares of Stock upon the exercise of the Option, the
Participant agrees to be bound by the Company’s policies regarding the
limitations on the transfer of such shares, and understands that there may be
certain times during the year that the Participant will be prohibited from
selling, transferring, pledging, donating, assigning, mortgaging, hypothecating
or otherwise encumbering the shares.

     

    
      
         


      

      
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    9.           No Employment or Other
Rights.  The grant of this Option shall not confer upon the
Participant any right to be retained in the Service of the Company or any
Affiliate and shall not interfere in any way with the right of the Company or
the applicable Affiliate to terminate the Participant’s Service at any
time.  The right of the Company and any applicable Affiliate to
terminate at will the Participant’s Service at any time for any reason is
specifically reserved.

     

    10.         No Stockholder
Rights.  Neither the Participant, nor any person entitled to
exercise the Participant’s rights in the event of the Participant’s death, shall
have any of the rights and privileges of a stockholder with respect to the
shares of Stock subject to the Option, until certificates for shares of Stock
have been issued upon the exercise of the Option.

     

    11.         Assignment and
Transfers.  The rights and interests of the Participant under
this Agreement may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution.  In the event of any attempt by the
Participant to alienate, assign, pledge, hypothecate, or otherwise dispose of
the Option or any right hereunder, except as provided for in this Agreement, or
in the event of the levy or any attachment, execution or similar process upon
the rights or interests hereby conferred, the Company may terminate the Option
by notice to the Participant, and the Option and all rights hereunder shall
thereupon become null and void.  The rights and protections of the
Company hereunder shall extend to any successors or assigns of the Company and
to any Affiliate.  This Agreement may be assigned by the Company
without the Participant’s consent.

     

    12.         Effect on Other
Benefits.  The value of shares of Stock received upon exercise
of the Option shall not be considered eligible earnings for purposes of any
other plans maintained by the Company or any other Affiliate, and such value
shall not be considered part of the Participant’s compensation for purposes of
determining or calculating other benefits that are based on compensation, such
as life insurance.

     

    13.         Applicable
Law.  The validity, construction, interpretation and effect of
this instrument shall be governed by and construed in accordance with the laws
of the State of Delaware, without giving effect to the conflicts of laws
provisions thereof.

     

    14.      
  Notice.  Any
notice to the Company provided for in this instrument shall be addressed to the
Company in care of the Board, Attn: General Counsel at the Company’s corporate
headquarters, and any notice to the Participant shall be addressed to such
Participant at the current address shown on the payroll records of the Company
or the applicable Affiliate, or to such other address as the Participant may
designate to the Company or the applicable Affiliate in writing.  Any
notice shall be delivered by hand, sent by facsimile or enclosed in a properly
sealed envelope addressed as stated above, registered and deposited, postage
prepaid, in a post office regularly maintained by the United States Postal
Service.

     

    15.         Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original but both of which together shall constitute one and the same
instrument.

     

     [SIGNATURE PAGE
FOLLOWS]


    
      
         


      

      
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    IN
WITNESS WHEREOF, the Company has caused its duly authorized officers to execute
and attest this Agreement, and the Participant has executed this Agreement,
effective as of the Grant Date.

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              	
                                                      DELTATHREE,
      INC.

                                                    
	 
      	 
	
                                                      By:
      

                                                    	 
	
                                                      Name:
      

                                                    	 
	
                                                      Title:
      

                                                    	 


                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    I hereby
accept the Option described in this Agreement, and I agree to be bound by the
terms of the Plan and this Agreement, as well as Section 102 and the Rules
promulgated in connection therewith, and the Trust Agreement. Furthermore, I
agree that the Option will be issued to the Trustee to hold on my behalf,
pursuant to the terms of the ITO, the Rules and the Trust
Agreement.  In addition, I confirm that I am familiar with the terms
and provisions of Section 102, particularly the Capital Gains Track described in
subsection (b)(2) thereof, and agree that I will not require the Trustee to
release the Option or shares of Stock to me or to sell the Option or shares of
Stock to a third party, during the Restricted Holding Period, unless permitted
to do so by applicable law. I hereby further agree that all of the decisions and
determinations of the Committee shall be final and binding.

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    Participant:
      

                                  	 


                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    
      
        
          
            	
                    Date:
      

                  	 


          

        

      

    

     

    
      
         


      

      
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