DELTATHREE,
INC.

     

    2009
STOCK INCENTIVE PLAN

    


    INCENTIVE STOCK OPTION
GRANT

     

    This
INCENTIVE 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 (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; Incentive
Stock Option Status.  Subject to the terms and conditions set
forth in this Agreement and in the Plan, the Company hereby grants to the
Participant an 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.  This Option is intended to qualify as an Incentive Stock Option
as defined in Section 422 of the Code.  However, notwithstanding such
designation, the Option will qualify as an Incentive Stock Option under the Code
only to the extent the $100,000 dollar limitation of Section 422(d) of the Code
(as such limitation may be amended from time to time) is not
exceeded.  The $100,000 limitation of Section 422(d) of the Code is
calculated based on the aggregate Market Value of the shares subject to options
designated as Incentive Stock Options which become exercisable for the first
time by the Participant during any calendar year (under all incentive plans of
the Company or any “parent corporation” or “subsidiary corporation” of the
Company (as such terms are defined in Section 424 of the Code)).  For
purposes of this calculation, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Market Value of the
shares subject to such options shall be determined as of the grant date of the
relevant option.

     

    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; Change
in Status of Incentive 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;
provided, however, that if such Disability is not a “disability” as such term is
defined in Section 22(e)(3) of the Code, this Option shall cease to be treated
as an Incentive Stock Option and shall be treated as a Nonstatutory Option on
the day three (3) months and one (1) day following the date of the Participant’s
termination of Service on account of 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.

     

    (c)           In
the event that the Participant’s status changes from employee of the Company or
an Affiliate to director or consultant of the Company or an Affiliate, this
Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Nonstatutory Option on the day three (3) months and one (1) day
following such change in status.

     

    
      
        
        

      

      
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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
written notice of intent to exercise in the manner provided in this Agreement,
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; (iii) by payment through a broker in accordance with procedures
permitted by Regulation T of the Federal Reserve Board; or (iv) 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)           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, including without limitation, such other tax obligations
of the Participant incident to the receipt of Stock or the disqualifying
disposition of Stock received on exercise of an Incentive Stock
Option.

     

    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.

     

    
      
        
        

      

      
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    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.

     

    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.

     

    
      
        
        

      

      
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    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. 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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