Document:

Exhibit 10.6

 

CONFIDENTIAL TREATMENT REQUESTED FOR

INFORMATION ON ATTACHMENT C OMITTED HERE AND

FILED SEPARATELY WITH THE COMMISSION

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement") is entered into on May 8, 2017 ("Execution Date") by and between MagicJack VocalTec Ltd. (the "Company") and Thomas E. D. Fuller (the "Executive" and, together with the Company, the "Parties").

 

WHEREAS, the Company desires for the Executive to be employed as Executive Vice President Finance, transitioning to the role of Executive Vice President and Chief Financial Officer ("CFO") of the Company immediately following the filing of the Company's form 10-Q for the first calendar quarter of 2017, which is expected to occur in mid-May, 2017, and Executive desires to accept employment, subject to and on the terms and conditions set forth in this Agreement;

 

WHEREAS, both the Company and the Executive have read and understood the terms and provisions set forth in this Agreement and have been afforded a reasonable opportunity to review this Agreement with their respective legal counsel; and

 

WHEREAS, the terms of this Agreement have been reviewed and approved by the members of the Compensation Committee of the Board of Directors of the Company (the "Board") and recommended by the Board for approval by the Company's shareholders in compliance with Amendment 20 to the Israeli Companies Law (the "Companies Law").

 

NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other valuable consideration the receipt and adequacy of which is hereby acknowledged, the Parties hereby agree as follows:

 

	1.	
POSITION AND DUTIES.  The Company hereby agrees to employ the Executive in the positions and titles of Executive Vice President of Finance, transitioning to the role of Executive Vice President and CFO of the Company as set forth in the recitals above, and the Executive hereby agrees to be employed in such capacities. The Executive will perform all duties and responsibilities inherent in the positions of Executive Vice President Finance and, upon transition, Executive Vice President & CFO. The Executive shall report directly to the Chief Executive Officer of the Company. He shall have all authority and responsibility commensurate with the Executive Vice President Finance and, upon transition, Executive Vice President & CFO titles.

 

	2.	
TERM OF AGREEMENT AND EMPLOYMENT.  The term of the Executive's employment under this Agreement will be three (3) years, beginning on March 13, 2017 (the "Start Date") and terminating three years thereafter "Employment Term."

 

	3.	
DEFINITIONS.

 

		A.	
CAUSE.  For purposes of this Agreement, "Cause" for the termination of the Executive's employment hereunder shall be deemed to exist if, in the reasonable judgment of the Company's Board: (i) the Executive commits fraud, theft or embezzlement against the Company or any subsidiary or affiliate thereof; (ii) the Executive commits a felony or a crime involving moral turpitude; (iii) the Executive breaches any non-competition, confidentiality or non-solicitation agreement with the Company or any subsidiary or affiliate thereof; (iv) the Executive's material breach of the Company's Insider Trading Policy, FD/Media Policy or Investment Policy, (v) the Executive breaches any of the terms of this Agreement and fails to cure such breach within thirty (30) days after the receipt of written notice of such breach from the Company; or (vi) the Executive engages in gross negligence or willful misconduct that causes harm to the business and operations of the Company or a subsidiary or affiliate thereof.

 

		B.	
GOOD REASON.  Termination by the Executive of his employment for "Good Reason" shall mean a termination by the Executive of his employment upon the occurrence of one of the following events or conditions without the consent of the Executive:

 

(i)  A material reduction in the authority, duties or responsibilities of the Executive;

 

(ii)  Any material reduction in the Executive's Annual Base Salary; or

 

(iii)  Any material breach of this Agreement by the Company.

 

Notwithstanding the foregoing, the Executive shall not be deemed to have terminated his employment for Good Reason unless: (i) the Executive terminates his employment no later than ninety (90) days following his initial discovery of the above referenced event or condition which is the basis for such termination; and (ii) the Executive provides to the Company a written notice of the existence of the above-referenced event or condition which is the basis for the termination within forty-five (45) days following his initial discovery of such event or condition, and the Company fails to remedy such event or condition within thirty (30) days following the receipt of such notice.

 

		C.	
CHANGE OF CONTROL.  For purposes of this Agreement, a "Change of Control" of the Company shall be deemed to occur if there is a transaction in which (i) a Person acquires ownership of stock that, together with stock held by such Person, constitutes more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; or (ii) a Person (other than a Person controlled, directly or indirectly, by shareholders of the Company) acquires fifty percent (50%) or more of the gross fair market value of the assets of the Company over a twelve (12) week period.

 

2

For purposes of the above, the terms "Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, and shall include a "group" as defined in Section 13(d) thereof.  It is intended that the definition of Change of Control complies with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), and all questions or determinations in connection with any such Change of Control shall be construed and interpreted in accordance with the provisions of such Regulations.  Notwithstanding the above, a Change of Control shall occur only if it constitutes a "change of control" within the meaning of Section 409A of the Code and the regulations promulgated thereunder.

 

	4.	
COMPENSATION.

 

		A.	
ANNUAL BASE SALARY.  Executive shall be paid an annual base salary of $275,000.00, subject to review each calendar year and possible increase in the sole discretion of the Board, payable in equal twice monthly installments (the "Annual Base Salary"), provided, however, Annual Base Salary earned between the Start Date and April 30, 2017, shall be paid on the first regular payroll date following the Execution Date.

 

		B.	
ANNUAL BONUS.  For each fiscal year of employment during which the Company employs the Executive, Executive shall be eligible to receive a bonus (the "Annual Bonus") based on the Company meeting certain performance criteria.  Executive's target annual bonus will equal seventy-five percent (75%) of Executive's Annual Base Salary (the "Target Annual Bonus").  The Annual Bonus will range from thirty-five percent (35%) to two hundred percent (200%) of the Target Annual Bonus.  The Annual Bonus formula and performance criteria for calendar year 2017 will be based: (i) fifty percent (50%) on the Company meeting at least eighty percent (80%) and up to one hundred and twenty percent (120%) of its target revenue for the fiscal year; and (ii) fifty percent (50%) on the Company meeting at least eighty percent (80%) and up to one hundred and twenty percent (120%) of its target EBITDA for the fiscal year.  A table showing the Target Annual Bonus payable at various increments is attached hereto as Attachment A.  The Company's target revenue and target EBITDA shall be set forth in its 10-Q for the first quarter of 2017 to be filed by the Company in May of 2017.  The Annual Bonus formula and performance criteria for calendar years 2018 and 2019 will be based: (i) one third (1/3) on the Company meeting at least eighty percent (80%) and up to one hundred and twenty percent (120%) of its target revenue for the applicable fiscal year; (ii) one-third (1/3) on the Company meeting at least eighty percent (80%) and up to one hundred and twenty percent (120%) of its target EBITDA for the applicable fiscal year, and (c) one-third (1/3) on the Company meeting at least eighty percent (80%) and up to one hundred and twenty percent (120%) of another objective key performance indicator (the "KPI Target") for the applicable fiscal year to be determined by the Board, or the Compensation Committee of the Board, after consultation with the Company's Chief Executive Officer and Executive.  A table showing the Target Annual Bonus payable at various increments for calendar years 2018 and 2019 is attached hereto as Attachment B.  The Company's target revenue, target EBITDA and the KPI Target for calendar years 2018 and 2019 shall be set forth in its 10-K for calendar years 2017 and 2018 to be filed in March of 2018 and 2019. For purposes of this Agreement, "EBITDA" shall mean earnings before interest, taxes, depreciation and amortization calculated in accordance with generally accepted accounting principles consistent with the application of such concepts in developing the Company's annual budget, subject to adjustments for one-time occurrences outside the ordinary course of business as deemed appropriate by the Company's Compensation Committee.

 

3

The Annual Bonus payable to Executive shall be paid no later than 2-1/2 months following the end of the calendar year with respect to which the Annual Bonus was earned.

 

Except as otherwise provided in Section 7 below, Executive shall only be entitled to receive an Annual Bonus if Executive is employed by the Company pursuant to this Agreement at the close of business on the last day of the applicable fiscal year with respect to the Annual Bonus.

 

If the Company's financial statements are restated for a period for which an Annual Bonus has been paid under the terms of this Agreement, the Annual Bonus amount for such period will be re-calculated by the Company (the "Recalculated Bonus Amount").  In any such event, the difference between the Annual Bonus in question and the Recalculated Bonus Amount shall be paid to or refunded by the Executive, as applicable, not later than sixty (60) days after the restatement, provided that no such adjustments will be made at any time after the 2nd anniversary of the Annual Bonus payment in question.

 

		C.	
SIGNING BONUS.  Executive shall receive a signing bonus in the amount of $275,000.00 within three (3) days after the Execution Date.

 

		D.	
SPECIAL TRANSACTION BONUS.  If the closing of a Change of Control occurs before the one year anniversary of the Execution Date and Executive is employed by the Company on the closing date, then Executive shall be paid within five (5) days after the Change of Control a bonus (the "Special Transaction Bonus") of up to $706,250, which will be calculated pursuant to the criteria set forth in Attachment C to this Agreement.  The Special Transaction Bonus is in addition to any Annual Bonus Executive may earn pursuant to Section 4(B) of this Agreement, or any Change of Control Termination Payment or any Termination Payment Executive is entitled to be paid pursuant to Section 7 of this Agreement. 

 

	5.	
EXECUTIVE BENEFITS AND REIMBURSEMENTS.  Executive will be entitled to twenty (20) paid-time-off (PTO) days of vacation per fiscal year. The Executive will be eligible to participate in, without action by the Board or any committee thereof, any benefits and perquisites available to executive officers of the Company, including any group health, dental, life insurance, disability, or other form of executive benefit plan or program of the Company now existing or that may be later adopted by the Company (collectively, the "Executive Benefits"). The Company shall reimburse Executive for all ordinary and necessary business expenditures made by Executive in connection with, or in furtherance of, his employment. Subject to Section 18 of this Agreement, the business expenditure and other reimbursements described above will be paid upon presentation by Executive of expense statements, receipts, vouchers or such other supporting information as may from time to time be reasonably requested by the Board.

 

4

	6.	
EQUITY GRANT. On the Execution Date, Executive shall be granted (a) 37,267 restricted ordinary shares of the Company (the "Restricted Stock") under the terms of the magicJack Vocaltec Ltd. 2013 Stock Incentive Plan, as may be amended and/or restated from time to time (the "Plan"), and (b) stock options to purchase 470,791 shares of the Company's common stock under the terms of the Amended and Restated magicJack Vocaltec Ltd. 2013 Stock Incentive Plan (the "Amended Plan"), at an exercise price equal to the greater of 115% of the fair market value of the Company's common stock as of the market close on May 5, 2017, or $9.51 (the "Options"), provided that the Options shall be forfeited if the Amended Plan and its terms are not approved by the shareholders of the Company within one (1) year following the Execution Date. The Options and Restricted Stock will vest as set forth in the Option Agreement and Restricted Stock Agreement granting the Options and the Restricted Stock.

 

	7.	
TERMINATION.  Either the Executive or the Company may terminate the Executive's employment under this Agreement for any reason upon not less than thirty (30) days prior written notice.

 

		A.	
TERMINATION OF EMPLOYMENT BY THE EXECUTIVE FOR GOOD REASON OR BY THE COMPANY WITHOUT CAUSE.  Upon the termination of the Executive's employment prior to a Change of Control under this Agreement by the Executive for Good Reason or by the Company without Cause, the Executive shall be entitled to be paid a termination payment (the "Termination Payment") equal to one (1) times the aggregate of (i) Executive's Annual Base Salary, and (ii) Executives Target Annual Bonus, at the time of such termination. The Termination Payment shall be paid in lump sum within fifteen (15) days after the Company's receipt of a general release that has become irrevocable as specified in Section 7(F) following any termination pursuant to this Section 7(A).

 

		B.	
TERMINATION OF EMPLOYMENT BY RESIGNATION OF EXECUTIVE WITHOUT GOOD REASON, BY THE COMPANY WITH CAUSE, DEATH OR DISABILITY. Upon the termination of the Executive's employment by the resignation of  Executive without Good Reason, by the Company with Cause, death, disability or for any other reason other than a reason described in Sections 7(A) or 7(C), the Executive shall be due no further compensation other than what is due and owing through the effective date of such Executive's resignation or termination (including any Annual Bonus that may be due and payable to the Executive).

 

5

		C.	
TERMINATION OF EMPLOYMENT BY THE EXECUTIVE FOR GOOD REASON OR BY THE COMPANY WITHOUT CAUSE FOLLOWING A CHANGE OF CONTROL.  If upon or within six (6) months subsequent to a Change of Control, that both (i) closes at any time more than six months following the Execution Date and (ii) is either (x) a transaction described in Section 3(C)(i)  in which the purchase price is greater than or equal to $9.51 per share, or (y) a transaction described in Section 3(C)(ii) where the enterprise value is greater than or equal to $9.51 per share (a "Qualifying Change in Control"), the Executive's employment under this Agreement is terminated by the Executive for Good Reason or by the Company without Cause ("Change of Control Termination"), the Executive shall be entitled to and paid a termination payment (the "Change of Control Termination Payment") equal to one and one-half (1.5) times the aggregate of (i) Executive's Annual Base Salary, and (ii) Executives Target Annual Bonus (as if the applicable performance criteria have been met at the level that would result in payment of the Target Annual Bonus at the 100% level irrespective of whether or not that is the case); provided, however, a Qualifying Change of Control shall be deemed not to occur if such transaction results from a written agreement entered into between the Company and a Person described in Section 3(C)(i) or Section 3(C)(ii) within six months following the Execution Date (regardless as to when such transaction closes).  The Change of Control Termination Payment shall be made within five (5) days after a Change of Control Termination.

 

		D.	
TERMINATION OF EMPLOYMENT BY THE EXECUTIVE FOR GOOD REASON OR BY THE COMPANY WITHOUT CAUSE WITHIN 180 DAYS PRIOR TO A CHANGE OF CONTROL.  If the Executive's employment under this Agreement is terminated by the Executive for Good Reason or by the Company without Cause one hundred eighty (180) days prior to the Company's execution of an agreement which, if consummated, would constitute a Qualifying Change of Control, then upon consummation of such Qualifying Change of Control, Executive shall receive an additional payment equal to the difference between (i) the Change of Control Termination Payment described in Section 7(C) and (ii) any Termination Payment previously provided to Executive under Section 7(A).  Any additional payment pursuant to this Section 7(D) shall be made within five (5) days after a Change of Control.

 

		E.	
PAYMENT REDUCTION UNDER SECTION 280G. Notwithstanding any other provision of this Agreement, in the event that the Change of Control Termination Payment or any payment or benefit received or to be received by Executive (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (collectively, the "Total Benefits") would be subject to the excise tax imposed under Section 4999 of the Code (the "Excise Tax"), the Total Benefits shall be reduced to the extent necessary so that no portion of the Total Benefits is subject to the Excise Tax; provided, however, that no such reduction in the Total Benefits shall be made if by not making such reduction, Executive's Retained Amount (as hereinafter defined) would be greater than Executive's Retained Amount if the Total Benefits are not so reduced.  In the event any such reduction is required, the Total Benefits shall be reduced in the following order: (i) the Change of Control Termination Payment, the Termination Payment, and the payment provided for by Section 7(D) (pro rata to the extent more than one is payable), (ii) any other portion of the Total Benefits that are not subject to Section 409A of the Code (other than Total Benefits resulting from any accelerated vesting of equity-based awards), (iv) Total Benefits that are subject to Section 409A of the Code in reverse order of payment, and (v) Total Benefits that are not subject to Section 409A and arise from any accelerated vesting of any equity-based awards.  All determinations with respect to this Section 7(D) and the assumptions to be utilized in arriving at such determination shall be made by an independent public accounting firm with a national reputation in the United States that is reasonably agreed to by the Executive and the Company (the "Accounting Firm") which shall provide detailed support and calculations both to the Company and to Executive. The parties hereto hereby elect to use the applicable Federal rate that is in effect on the date this Agreement is entered into for purposes of determining the present value of any payments provided for hereunder for purposes of Section 280G of the Code.  "Retained Amount" shall mean the present value (as determined in accordance with sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of the Total Benefits net of all federal, state and local taxes imposed on Executive with respect thereto.

 

6

		F.	
GENERAL RELEASE OF CLAIMS.  Executive shall not be entitled to any Termination Payment, Change of Control Termination Payment, or the payment provided for by Section 7.D (each, a "Severance Payment") unless (i) Executive has executed and delivered to the Company a general release of claims (in such form as the Executive and the Company shall reasonably agree) (the "Release") and such Release has become irrevocable under the Age Discrimination in Employment Act (ADEA) and its terms not later than fifty-six (56) days after the date of Executive's termination of employment hereunder.  Notwithstanding anything herein to the contrary, in the event such 56-day period falls into two (2) calendar years, the Severance Payment shall not be paid until the second calendar year but in no event later than 60 days following date of Executive's termination of employment.  The Company shall deliver to Executive a copy of the Release not later than three (3) days after the Company's termination of Executive's employment without Cause or Executive's termination of Employment for Good Reason.

 

		G.	
NO OFFSET AND NO MITIGATION.  Executive shall not be required to mitigate any damages resulting from a breach by the Company of this Agreement by seeking other comparable employment. The amount of any payment or benefit provided for in this Agreement shall not be reduced by any compensation or benefits earned by or provided to Executive as a result of his employment by another employer.

 

		H.	
CONTINUING OBLIGATIONS AFTER TERMINATION.  Following termination of employment, Executive shall have the following continuing obligations to the Company:  (i) to cooperate in good faith with the Company, without any additional compensation, with respect to any legal matters involving potential or actual litigation relating to an event occurring during the Employment Term, and any renewals thereof, of which event Executive has actual knowledge; and, (ii) to cooperate in good faith with the Company, without any additional compensation, to transfer and transition Executive's pending and prior work and work-related information to a person designated by the Company.  The Company agrees to make reasonable efforts to schedule such assistance at times that do not interfere with Executive's employment or other business activities, and to reimburse Executive for reasonable travel costs incurred by Executive in providing such assistance upon presentation by Executive of documentation required by Company expense reimbursement policies, provided, however, that the obligations in clause (ii) shall end: (x)  one (1) year after Executive's last day of employment with the Company, if Executive is eligible to be paid any Termination Payment or Change of Control Termination Payment after his employment ends pursuant to Section 7(A) or 7(C) of this Agreement, or (y) ninety (90) days after Executive's last day of employment with the Company, if Executive is not eligible to be paid any Termination Payment or Change of Control Termination Payment after his employment ends pursuant to Section 7(A) or 7(C) of this Agreement.

 

7

	8.	
REPRESENTATIONS.  The Executive hereby represents and warrants to the Company that (i) the execution, delivery and full performance of this Agreement by the Executive does not and will not conflict with, breach, violate or cause a default under any agreement, contract or instrument to which the Executive is a party or any judgment, order or decree to which the Executive is subject; and (ii) upon the execution and delivery of this Agreement by the Executive and the Company, this Agreement will be the Executive's valid and binding obligation, enforceable in accordance with its terms.

 

	9.	
INTENTIONALLY OMITTED.

 

	10.	
ASSIGNMENT; THIRD PARTY BENEFICIARY.  This Agreement, and the Executive's rights and obligations hereunder, may not be assigned, subcontracted, or delegated by the Executive.  The Company may only assign its rights, and delegate its obligations, hereunder to any successor in interest, provided, however, the Company may not delegate its obligations under Section 4(D) or Section 7(D) of this Agreement.  The rights and obligations of the Company under this Agreement shall inure to the benefit of and be binding upon and enforceable by its respective successors and assigns. Neither the Executive nor the Executive's beneficiary or beneficiaries will have any right to receive any compensation or other benefits under this Agreement, except at the time, in the amounts and in the manner provided in this Agreement.  As used in this Agreement, the term "successor" means any person, firm, corporation or other business entity which at any time, whether by merger, purchase or otherwise, acquires all or substantially all of the capital stock or assets of the Company.

 

	11.	
PREVAILING PARTY FEES; GOVERNING LAW.  If either party breaches this Agreement, or any dispute arises out of, arises under, or relates to, this Agreement, the prevailing party shall be entitled to its reasonable attorneys' fees, paralegals' fees, and costs, at all levels.  In the event of any litigation arising out of or relating to this Agreement, the exclusive venue shall be in Palm Beach County, Florida, and shall be governed by the laws of the State of Florida, without regard to its choice of law principles, except where the application of federal law applies, and shall be decided by a judge, not a jury.  THE PARTIES SPECIFICALLY WAIVE THEIR RIGHT TO A TRIAL BY JURY. In the event that either Party applies to seal any papers produced or filed in any judicial proceedings to preserve confidentiality (the "Moving Party"), both Parties hereby specifically agree (a) the Moving Party will provide the attorneys for the other Party with copies of all such papers; (b) the other Party will not oppose such application; and (c) the other Party will use his or its best efforts to join such application.

 

8

	12.	
CONFIDENTIALITY, NON-COMPETITION AND WORK PRODUCT; HANDBOOK.  The Company considers the protection of its confidential information, proprietary materials and goodwill to be extremely important.  Given the confidential nature of various aspects of our business, Employee may not discuss the fact or terms of this Agreement or any employment discussions with anyone other than a member of the Company's management team and members of Employee's immediate family (and, if relevant, your recruiting firm, financial advisor or lawyer).  In addition, as is true of all Company employees, Employee will be required to sign and return an agreement relating to confidentiality, non-competition and work product (the "PIIA") by no later than the Effective Date as a condition of employment.  A copy of the PIIA is provided with this Agreement.  Employee will also be required to review and acknowledge receipt of magicJack's Employment Handbook (the "Handbook"), and Employee's agreement to comply with the terms of the Handbook and the policies contained therein, by returning a signed copy of the Acknowledge Form included in the Handbook no later than the Effective Date.  A copy of the Handbook is included with this Agreement.

 

	13.	
ENTIRE AGREEMENT.  This Agreement, the PIIA and the Handbook (collectively, the "Executive Agreements") constitute the only agreements between Company and the Executive regarding the Executive's employment by the Company. The Executive Agreements supersede any and all other agreements and understandings, written or oral, between the Company and the Executive regarding the subject matter hereof and thereof. A waiver by either party of any provision of this Agreement or any breach of such provision in an instance will not be deemed or construed to be a waiver of such provision for the future, or of any subsequent breach of such provision. This Agreement may be amended, modified or changed only by further written agreement between the Company and the Executive, duly executed by both Parties.

 

	14.	
NO WAIVER.  No failure to exercise, and no delay in exercising, any right, power or privilege under this Agreement shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege hereunder preclude the exercise of any other right, power or privilege.  No waiver of any breach of any provision shall be deemed to be a waiver of any preceding or succeeding breach of the same or any other provision, nor shall any waiver be implied from any course of dealing between the Parties.  No extension of time for performance of any obligations or other acts hereunder or under any other agreement shall be deemed to be an extension of the time for performance of any other obligations or any other acts.  The rights and remedies of the Parties under this Agreement are in addition to all other rights and remedies, at law or in equity, that they may have against each other.  All rights are cumulative under this Agreement.

9

	15.	
SEVERABILITY; SURVIVAL.  In the event that any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction, then such unenforceable provision shall be deemed modified so as to be enforceable (or if not subject to modification then eliminated herefrom) to the extent necessary to permit the remaining provisions to be enforced in accordance with the Parties' intention. The provisions of Section 8 (and the restrictive covenants contained therein) shall survive the termination for any reason of this Agreement and/or the Executive's relationship with the Company.

 

	16.	
NOTICES.  Any and all notices required or permitted to be given hereunder will be in writing and will be deemed to have been given when deposited in United States mail, certified or registered mail, postage prepaid. Any notice to be given by the Executive hereunder will be addressed to the Company to the attention of Chief Executive Officer at 222 Lakeview Avenue, Suite 1600, West Palm Beach, Florida 33401. Any notice to be given to the Executive will be addressed to the Executive at the Executive's residence address last provided by the Executive to the Company. Either party may change the address to which notices are to be addressed by notice in writing to the other party given in accordance with the terms of this Section.

 

	17.	
HEADINGS.  Section headings are for convenience of reference only and shall not limit or otherwise affect the meaning or interpretation of this Agreement or any of its terms and conditions.

 

	18.	
COUNTERPARTS/ELECTRONIC TRANSMISSION.  This Agreement may be signed in any number of counterparts and transmitted via electronic means (email, facsimile, etc.), each of which shall be an original but all of which together shall constitute one and the same instrument.

 

	19.	
SECTION 409A COMPLIANCE.

 

		A.	
GENERAL.  It is the intention of both the Company and the Executive that the benefits and rights to which the Executive is entitled pursuant to this Agreement comply with Code Section 409A or exceptions thereto and the provisions of this Agreement shall be construed in a manner consistent with that intention. If the Executive or the Company believes, at any time, that any such benefit or right that is subject to Code Section 409A does not so comply, it shall promptly advise the other and shall negotiate reasonably and in good faith to amend the terms of such benefits and rights such that they comply with Code Section 409A (with the most limited possible economic effect on the Executive and on the Company).

 

		B.	
DISTRIBUTIONS ON ACCOUNT OF SEPARATION FROM SERVICE.  To the extent required to comply with Code Section 409A, any payment or benefit required to be paid under this Agreement on account of termination of the Executive's service (or any other similar term) shall be made only in connection with a "separation from service" with respect to the Executive within the meaning of Code Section 409A.

 

10

		C.	
NO ACCELERATION OF PAYMENTS.  Neither the Company nor the Executive, individually or in combination, may accelerate any payment or benefit that is subject to Code Section 409A, except in compliance with Code Section 409A and the provisions of this Agreement, and no amount that is subject to Code Section 409A shall be paid prior to the earliest date on which it may be paid without violating Code Section 409A.

 

		D.	
SIX MONTH DELAY FOR SPECIFIED EMPLOYEES. In the event that the Executive is a "specified employee" (as described in Code Section 409A), and any payment or benefit payable pursuant to this Agreement constitutes deferred compensation under Code Section 409A, then, to the extent required to comply with Section 409A of the Code, no such payment or benefit shall be made before the date that is six months after the Executive's "separation from service" (as described in Code Section 409A) (or, if earlier, the date of the Executive's death). Any payment or benefit delayed by reason of the prior sentence shall be paid out or provided in a single lump sum at the end of such required delay period in order to catch up to the original payment schedule.

 

		E.	
TREATMENT OF EACH INSTALLMENT AS A SEPARATE PAYMENT.  For purposes of applying the provisions of Code Section 409A to this Agreement, each separately identified amount to which the Executive is entitled under this Agreement shall be treated as a separate payment. In addition, to the extent permissible under Code Section 409A, any series of installment payments under this Agreement shall be treated as a right to a series of separate payments.

 

		F.	
REIMBURSEMENTS AND IN-KIND BENEFITS.  With respect to reimbursements and in‐kind benefits that may be provided under the Agreement (the "Reimbursement Plans"), to the extent any benefits provided under the Reimbursement Plans are subject to Section 409A, the Reimbursement Plans shall meet the following requirements:

 

(i)      Reimbursement Plans shall use an objectively determinable, nondiscretionary definition of the expenses eligible for reimbursement or of the in-kind benefits to be provided;

 

(ii)     Reimbursement Plans shall provide that the amount of expenses eligible for reimbursement, or in-kind benefits provided, during the Executive's taxable year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year, provided, however, that Reimbursement Plans providing for reimbursement of expenses referred to in Code Section 105(b) shall not fail to meet the requirement of this Section 17(F)(ii) solely because such Reimbursement Plans provide for a limit on the amount of expenses that may be reimbursed under such arrangements over some or all of the period in which Reimbursement Plans remain in effect;

 

(iii)    The reimbursement of an eligible expense is made on or before the last day of Executive's taxable year following the taxable year in which the expense was incurred; and

 

(iv)    The right to reimbursement or in-kind benefits under the Reimbursement Plans shall not be subject to liquidation or exchange for another benefit.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

11

  

 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Agreement under seal effective as of the Effective Date.

 

MAGICJACK VOCALTEC LTD.

 

Signature:   /s/ Don Carlos Bell III

Name:          Don Carlos Bell III

Title:            Chief Executive Officer

Dated:         May 8, 2017

 

EXECUTIVE

 

Signature:   /s/ Thomas E. D. Fuller

Name:          Thomas E. D. Fuller

Dated:         May 8, 2017

 

12

  

 

ATTACHMENT A

 

	
% of Revenue Target

	 	 	
Annual Target Bonus*

	 	 	
% of EBITDA Target

	 	 	
Annual Target Bonus*

	 
	 	 	 	 	 	 	 	 	 	 	 
	
<80

	%	 	
$

	
-

	 	 	
<80

	%	 	
$

	
-

	 
	 	
80

	
%

	 	
$

	
36,093.75

	 	 	 	
80

	
%

	 	
$

	
36,093.75

	 
	 	
81

	
%

	 	
$

	
39,445.31

	 	 	 	
81

	
%

	 	
$

	
39,445.31

	 
	 	
82

	
%

	 	
$

	
42,796.88

	 	 	 	
82

	
%

	 	
$

	
42,796.88

	 
	 	
83

	
%

	 	
$

	
46,148.44

	 	 	 	
83

	
%

	 	
$

	
46,148.44

	 
	 	
84

	
%

	 	
$

	
49,500.00

	 	 	 	
84

	
%

	 	
$

	
49,500.00

	 
	 	
85

	
%

	 	
$

	
52,851.57

	 	 	 	
85

	
%

	 	
$

	
52,851.57

	 
	 	
86

	
%

	 	
$

	
56,203.13

	 	 	 	
86

	
%

	 	
$

	
56,203.13

	 
	 	
87

	
%

	 	
$

	
59,554.69

	 	 	 	
87

	
%

	 	
$

	
59,554.69

	 
	 	
88

	
%

	 	
$

	
62,906.25

	 	 	 	
88

	
%

	 	
$

	
62,906.25

	 
	 	
89

	
%

	 	
$

	
66,257.82

	 	 	 	
89

	
%

	 	
$

	
66,257.82

	 
	 	
90

	
%

	 	
$

	
69,609.38

	 	 	 	
90

	
%

	 	
$

	
69,609.38

	 
	 	
91

	
%

	 	
$

	
72,960.94

	 	 	 	
91

	
%

	 	
$

	
72,960.94

	 
	 	
92

	
%

	 	
$

	
76,312.51

	 	 	 	
92

	
%

	 	
$

	
76,312.51

	 
	 	
93

	
%

	 	
$

	
79,664.07

	 	 	 	
93

	
%

	 	
$

	
79,664.07

	 
	 	
94

	
%

	 	
$

	
83,015.63

	 	 	 	
94

	
%

	 	
$

	
83,015.63

	 
	 	
95

	
%

	 	
$

	
86,367.20

	 	 	 	
95

	
%

	 	
$

	
86,367.20

	 
	 	
96

	
%

	 	
$

	
89,718.76

	 	 	 	
96

	
%

	 	
$

	
89,718.76

	 
	 	
97

	
%

	 	
$

	
93,070.32

	 	 	 	
97

	
%

	 	
$

	
93,070.32

	 
	 	
98

	
%

	 	
$

	
96,421.88

	 	 	 	
98

	
%

	 	
$

	
96,421.88

	 
	 	
99

	
%

	 	
$

	
99,773.45

	 	 	 	
99

	
%

	 	
$

	
99,773.45

	 
	 	
100

	
%

	 	
$

	
103,125.01

	 	 	 	
100

	
%

	 	
$

	
103,125.01

	 
	 	
101

	
%

	 	
$

	
108,281.26

	 	 	 	
101

	
%

	 	
$

	
108,281.26

	 
	 	
102

	
%

	 	
$

	
113,437.51

	 	 	 	
102

	
%

	 	
$

	
113,437.51

	 
	 	
103

	
%

	 	
$

	
118,593.76

	 	 	 	
103

	
%

	 	
$

	
118,593.76

	 
	 	
104

	
%

	 	
$

	
123,750.01

	 	 	 	
104

	
%

	 	
$

	
123,750.01

	 
	 	
105

	
%

	 	
$

	
128,906.26

	 	 	 	
105

	
%

	 	
$

	
128,906.26

	 
	 	
106

	
%

	 	
$

	
134,062.51

	 	 	 	
106

	
%

	 	
$

	
134,062.51

	 
	 	
107

	
%

	 	
$

	
139,218.76

	 	 	 	
107

	
%

	 	
$

	
139,218.76

	 
	 	
108

	
%

	 	
$

	
144,375.01

	 	 	 	
108

	
%

	 	
$

	
144,375.01

	 
	 	
109

	
%

	 	
$

	
149,531.26

	 	 	 	
109

	
%

	 	
$

	
149,531.26

	 
	 	
110

	
%

	 	
$

	
154,687.51

	 	 	 	
110

	
%

	 	
$

	
154,687.51

	 
	 	
111

	
%

	 	
$

	
159,843.76

	 	 	 	
111

	
%

	 	
$

	
159,843.76

	 
	 	
112

	
%

	 	
$

	
165,000.01

	 	 	 	
112

	
%

	 	
$

	
165,000.01

	 
	 	
113

	
%

	 	
$

	
170,156.26

	 	 	 	
113

	
%

	 	
$

	
170,156.26

	 
	 	
114

	
%

	 	
$

	
175,312.51

	 	 	 	
114

	
%

	 	
$

	
175,312.51

	 
	 	
115

	
%

	 	
$

	
180,468.76

	 	 	 	
115

	
%

	 	
$

	
180,468.76

	 
	 	
116

	
%

	 	
$

	
185,625.01

	 	 	 	
116

	
%

	 	
$

	
185,625.01

	 
	 	
117

	
%

	 	
$

	
190,781.26

	 	 	 	
117

	
%

	 	
$

	
190,781.26

	 
	 	
118

	
%

	 	
$

	
195,937.51

	 	 	 	
118

	
%

	 	
$

	
195,937.51

	 
	 	
119

	
%

	 	
$

	
201,093.76

	 	 	 	
119

	
%

	 	
$

	
201,093.76

	 
	 	
120

	
%

	 	
$

	
206,250.00

	 	 	 	
120

	
%

	 	
$

	
206,250.00

	 
	
>120

	%	 	
$

	
206,250.00

	 	 	
>120

	%	 	
$

	
206,250.00

	 
	
*Based on Target Bonus of $206,250

	 	 	 	 	 	 	 	 	 

 

13

 

 

ATTACHMENT B

 

	
% of Revenue Target

	 	 	
Annual Target Bonus*

	 	 	
% of EBITDA Target

	 	 	
Annual Target Bonus*

	 	 	
% of KPI Target

	 	 	
Annual Target Bonus*

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
<80

	%	 	
$

	
-

	 	 	
<80

	%	 	
$

	
-

	 	 	
<80

	% 	 	
$

	
-

	 
	 	
80

	
%

	 	
$

	
24,062.50

	 	 	 	
80

	
%

	 	
$

	
24,062.50

	 	 	 	
80

	
%

	 	
$

	
24,062.50

	 
	 	
81

	
%

	 	
$

	
26,296.88

	 	 	 	
81

	
%

	 	
$

	
26,296.88

	 	 	 	
81

	
%

	 	
$

	
26,296.88

	 
	 	
82

	
%

	 	
$

	
28,531.25

	 	 	 	
82

	
%

	 	
$

	
28,531.25

	 	 	 	
82

	
%

	 	
$

	
28,531.25

	 
	 	
83

	
%

	 	
$

	
30,765.63

	 	 	 	
83

	
%

	 	
$

	
30,765.63

	 	 	 	
83

	
%

	 	
$

	
30,765.63

	 
	 	
84

	
%

	 	
$

	
33,000.00

	 	 	 	
84

	
%

	 	
$

	
33,000.00

	 	 	 	
84

	
%

	 	
$

	
33,000.00

	 
	 	
85

	
%

	 	
$

	
35,234.38

	 	 	 	
85

	
%

	 	
$

	
35,234.38

	 	 	 	
85

	
%

	 	
$

	
35,234.38

	 
	 	
86

	
%

	 	
$

	
37,468.75

	 	 	 	
86

	
%

	 	
$

	
37,468.75

	 	 	 	
86

	
%

	 	
$

	
37,468.75

	 
	 	
87

	
%

	 	
$

	
39,703.13

	 	 	 	
87

	
%

	 	
$

	
39,703.13

	 	 	 	
87

	
%

	 	
$

	
39,703.13

	 
	 	
88

	
%

	 	
$

	
41,937.50

	 	 	 	
88

	
%

	 	
$

	
41,937.50

	 	 	 	
88

	
%

	 	
$

	
41,937.50

	 
	 	
89

	
%

	 	
$

	
44,171.88

	 	 	 	
89

	
%

	 	
$

	
44,171.88

	 	 	 	
89

	
%

	 	
$

	
44,171.88

	 
	 	
90

	
%

	 	
$

	
46,406.25

	 	 	 	
90

	
%

	 	
$

	
46,406.25

	 	 	 	
90

	
%

	 	
$

	
46,406.25

	 
	 	
91

	
%

	 	
$

	
48,640.63

	 	 	 	
91

	
%

	 	
$

	
48,640.63

	 	 	 	
91

	
%

	 	
$

	
48,640.63

	 
	 	
92

	
%

	 	
$

	
50,875.00

	 	 	 	
92

	
%

	 	
$

	
50,875.00

	 	 	 	
92

	
%

	 	
$

	
50,875.00

	 
	 	
93

	
%

	 	
$

	
53,109.38

	 	 	 	
93

	
%

	 	
$

	
53,109.38

	 	 	 	
93

	
%

	 	
$

	
53,109.38

	 
	 	
94

	
%

	 	
$

	
55,343.75

	 	 	 	
94

	
%

	 	
$

	
55,343.75

	 	 	 	
94

	
%

	 	
$

	
55,343.75

	 
	 	
95

	
%

	 	
$

	
57,578.13

	 	 	 	
95

	
%

	 	
$

	
57,578.13

	 	 	 	
95

	
%

	 	
$

	
57,578.13

	 
	 	
96

	
%

	 	
$

	
59,812.50

	 	 	 	
96

	
%

	 	
$

	
59,812.50

	 	 	 	
96

	
%

	 	
$

	
59,812.50

	 
	 	
97

	
%

	 	
$

	
62,046.88

	 	 	 	
97

	
%

	 	
$

	
62,046.88

	 	 	 	
97

	
%

	 	
$

	
62,046.88

	 
	 	
98

	
%

	 	
$

	
64,281.25

	 	 	 	
98

	
%

	 	
$

	
64,281.25

	 	 	 	
98

	
%

	 	
$

	
64,281.25

	 
	 	
99

	
%

	 	
$

	
66,515.63

	 	 	 	
99

	
%

	 	
$

	
66,515.63

	 	 	 	
99

	
%

	 	
$

	
66,515.63

	 
	 	
100

	
%

	 	
$

	
68,750.00

	 	 	 	
100

	
%

	 	
$

	
68,750.00

	 	 	 	
100

	
%

	 	
$

	
68,750.00

	 
	 	
101

	
%

	 	
$

	
72,187.50

	 	 	 	
101

	
%

	 	
$

	
72,187.50

	 	 	 	
101

	
%

	 	
$

	
72,187.50

	 
	 	
102

	
%

	 	
$

	
75,625.00

	 	 	 	
102

	
%

	 	
$

	
75,625.00

	 	 	 	
102

	
%

	 	
$

	
75,625.00

	 
	 	
103

	
%

	 	
$

	
79,062.50

	 	 	 	
103

	
%

	 	
$

	
79,062.50

	 	 	 	
103

	
%

	 	
$

	
79,062.50

	 
	 	
104

	
%

	 	
$

	
82,500.00

	 	 	 	
104

	
%

	 	
$

	
82,500.00

	 	 	 	
104

	
%

	 	
$

	
82,500.00

	 
	 	
105

	
%

	 	
$

	
85,937.50

	 	 	 	
105

	
%

	 	
$

	
85,937.50

	 	 	 	
105

	
%

	 	
$

	
85,937.50

	 
	 	
106

	
%

	 	
$

	
89,375.00

	 	 	 	
106

	
%

	 	
$

	
89,375.00

	 	 	 	
106

	
%

	 	
$

	
89,375.00

	 
	 	
107

	
%

	 	
$

	
92,812.50

	 	 	 	
107

	
%

	 	
$

	
92,812.50

	 	 	 	
107

	
%

	 	
$

	
92,812.50

	 
	 	
108

	
%

	 	
$

	
96,250.00

	 	 	 	
108

	
%

	 	
$

	
96,250.00

	 	 	 	
108

	
%

	 	
$

	
96,250.00

	 
	 	
109

	
%

	 	
$

	
99,687.50

	 	 	 	
109

	
%

	 	
$

	
99,687.50

	 	 	 	
109

	
%

	 	
$

	
99,687.50

	 
	 	
110

	
%

	 	
$

	
103,125.00

	 	 	 	
110

	
%

	 	
$

	
103,125.00

	 	 	 	
110

	
%

	 	
$

	
103,125.00

	 
	 	
111

	
%

	 	
$

	
106,562.50

	 	 	 	
111

	
%

	 	
$

	
106,562.50

	 	 	 	
111

	
%

	 	
$

	
106,562.50

	 
	 	
112

	
%

	 	
$

	
110,000.00

	 	 	 	
112

	
%

	 	
$

	
110,000.00

	 	 	 	
112

	
%

	 	
$

	
110,000.00

	 
	 	
113

	
%

	 	
$

	
113,437.50

	 	 	 	
113

	
%

	 	
$

	
113,437.50

	 	 	 	
113

	
%

	 	
$

	
113,437.50

	 
	 	
114

	
%

	 	
$

	
116,875.00

	 	 	 	
114

	
%

	 	
$

	
116,875.00

	 	 	 	
114

	
%

	 	
$

	
116,875.00

	 
	 	
115

	
%

	 	
$

	
120,312.50

	 	 	 	
115

	
%

	 	
$

	
120,312.50

	 	 	 	
115

	
%

	 	
$

	
120,312.50

	 
	 	
116

	
%

	 	
$

	
123,750.00

	 	 	 	
116

	
%

	 	
$

	
123,750.00

	 	 	 	
116

	
%

	 	
$

	
123,750.00

	 
	 	
117

	
%

	 	
$

	
127,187.50

	 	 	 	
117

	
%

	 	
$

	
127,187.50

	 	 	 	
117

	
%

	 	
$

	
127,187.50

	 
	 	
118

	
%

	 	
$

	
130,625.00

	 	 	 	
118

	
%

	 	
$

	
130,625.00

	 	 	 	
118

	
%

	 	
$

	
130,625.00

	 
	 	
119

	
%

	 	
$

	
134,062.50

	 	 	 	
119

	
%

	 	
$

	
134,062.50

	 	 	 	
119

	
%

	 	
$

	
134,062.50

	 
	 	
120

	
%

	 	
$

	
137,500.00

	 	 	 	
120

	
%

	 	
$

	
137,500.00

	 	 	 	
120

	
%

	 	
$

	
137,500.00

	 
	
>120

	% 	 	
$

	
137,500.00

	 	 	
>120

	%	 	
$

	
137,500.00

	 	 	
>120

	% 	 	
$

	
137,500.00

	 
	
*Based on Target Bonus of $206,250

	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

14

  

CONFIDENTIAL TREATMENT REQUESTED FOR

 INFORMATION ON ATTACHMENT C OMITTED HERE AND

FILED SEPARATELY WITH THE COMMISSION

 

ATTACHMENT C

 

Special Transaction Bonus Calculation

 

A Special Transaction Bonus as described in Section 4(D) of the Agreement will be calculated for a "Change of Control" as described in Section 3(C)(i)  based on [**********************]  or for a "Change of Control" as described in Section 3(C)(ii)  based on [******************], as follows:

 

		·	
Price/value less than [************] – $0;

 

		·	
Price/value [************] - $500,000

 

		·	
Price/value [************] - $706,250Exhibit 10.7

NAME OF OPTIONEE: Thomas E. D. Fuller

DATE OF GRANT: May 8, 2017

EXERCISE PRICE: $9.51

COVERED SHARES: 470,791

 

AMENDED AND RESTATED MAGICJACK VOCALTEC LTD

2013 STOCK INCENTIVE PLAN

STOCK OPTION AGREEMENT

 

1.     Definitions.  In this Agreement, capitalized terms used herein and not defined in the Plan or elsewhere herein shall have the following meanings:

 

1.1     “Agreement” means this Stock Option Agreement.

 

1.2     “Cause” means in the reasonable judgment of the Board: (i) Optionee commits fraud, theft or embezzlement against the Company or any Affiliate; (ii) Optionee commits a felony or a crime involving moral turpitude; (iii) Optionee refuses to execute or materially breaches the terms of the Company’s Insider Trading Policy or FD/Media Policy as in effect from time-to-time, (iv) Optionee breaches any of the terms of the Employment Agreement and fails to cure such breach within thirty (30) days after the receipt of written notice of such breach from the Company; or (v) Optionee engages in gross negligence or willful misconduct that causes harm to the business and operations of the Company or an Affiliate.

 

1.3     “Change of Control” means and shall be deemed to occur if (i) a Person acquires ownership of stock that, together with stock held by such Person, constituting more than fifty percent (50%) of the total fair market value or total voting power of the stock of the Company; or (ii) a Person (other than a Person controlled, directly or indirectly, by shareholders of the Company) acquires fifty percent (50%) or more of the gross fair market value of the assets of the Company over a twelve (12) week period.

 

1.4     “Covered Shares” means the Ordinary Shares subject to the Option.

 

1.5     “Date of Exercise” means the date on which the Company receives notice pursuant to Section 4.1 of the exercise, in whole or in part, of the Option.

 

1.6     “Date of Expiration” means the date on which the Option shall expire, which shall be the earliest of the following times:

 

(a)     the date of the first notification to the Optionee that the Optionee’s Service is terminated by the Company or an Affiliate for Cause;

 

(b)     six (6) months after termination of the Optionee’s Service for any reason other than by the Company or an Affiliate for Cause; or

 

(c)     five years after the Date of Grant.

 

1.7     “Date of Grant” means the date set forth at the beginning of this Agreement.

 

1.8     “Disability” means total and permanent disability under Section 22(e)(3) of the Code or Participant’s becoming entitled to long-term disability benefits under the long-term disability plan or policy of the Company and/or its Affiliates that covers Participant, if any.

 

1.9     “Employment Agreement” means the Employment Agreement by and between Executive and the Company of near or even date herewith.

 

1.10   “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

1.11   “Exercise Price” means the dollar amount per Ordinary Share set forth on page 1 of this Agreement as the Exercise Price, as it may be adjusted from time to time pursuant to the Plan.

 

1.12   “Good Reason” means termination by Optionee of his employment upon the occurrence of one of the following events or conditions without the consent of the Optionee:

 

		(i)	
A material reduction in the authority, duties or responsibilities of the Optionee;

 

		(ii)	
Any material reduction in the Optionees’s Annual Base Salary or Target Annual Bonus as set forth in the Employment Agreement; or

 

		(iii)	
Any material breach of the Employment Agreement by the Company.

 

Notwithstanding the foregoing,  Optionee shall not be deemed to have terminated his employment for Good Reason unless: (i) Optionee terminates his employment no later than ninety (90) days following his initial discovery of the above referenced event or condition which is the basis for such termination; and (ii) Optionee provides to the Company a written notice of the existence of the above referenced event or condition which is the basis for the termination within forty-five (45) days following his initial discovery of such event or condition, and the Company fails to remedy such event or condition within thirty (30) days following the receipt of such notice.

 

1.13   “Option” means the stock option granted to the Optionee in Section 2 of this Agreement.

 

1.14   “Optionee” means the person identified on page 1 of this Agreement.

 

1.15   “Person” means the term “person” within the meaning of Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d)(3) and 14(d) thereof.

 

1.16   “Plan” means the Amended and Restated magicJack Vocaltec Ltd. 2013 Stock Incentive Plan.

 

2

1.17   “Service” means, if the Optionee is (a) an employee of the Company and/or any of its Affiliates (as determined by the Committee in its reasonable discretion), the Optionee’s service as an employee of the Company and/or any of its Affiliates, (b) a member of the Board or the board of directors of an Affiliate but not an employee of the Company or any of its Affiliates (as determined by the Committee in its reasonable discretion), the Optionee’s service as a member of such Board or board of directors, or (c) a consultant or independent contractor to the Company or any of its Affiliates (as determined by the Committee in its reasonable discretion) and is not described in the preceding clause (b), the Optionee’s service as a consultant or independent contractor to the Company and/or any of its Affiliates.

 

Capitalized terms used herein but not defined herein shall have the meanings assigned in the Plan.

 

2.     Grant of Option.  Pursuant to the Plan and subject to the terms of this Agreement, the Company hereby grants to the Optionee, as of the Date of Grant, the Option to purchase from the Company that number of shares identified as the “Covered Shares” on page 1 of this Agreement, exercisable at the Exercise Price.

 

3.     Terms of the Option.

 

3.1     Type of Option.  The Option is intended to be a Nonqualified Stock Option.

 

3.2     Option Period; Exercisability.  The Option may be exercised in whole shares during the period commencing on the Date of Grant and terminating on the Date of Expiration, as follows:

 

(a)     no part of the Option may be exercised until the first anniversary of the Date of Grant;

 

(b)     beginning on the first anniversary of the Date of Grant, the Option may be exercised as to thirty-three and one-third percent (33-1/3%) of the Covered Shares;

 

(c)     beginning on March 13, 2019, the Option may be exercised as to an additional thirty-three and one-third percent (33-1/3%) of the Covered Shares; and

 

(d)     beginning on March 13, 2020, the Option may be exercised as to all of the Covered Shares.

 

3

Notwithstanding the foregoing, if, after the first anniversary of the Date of Grant, (I) Optionee’s Service ends as a result of Optionee’s death or Disability, then the Option may be exercised to the extent not previously exercised, as to a number of Covered Shares equal to (a) the total number of Covered Shares multiplied by (b) (i) the number of days elapsed between the Date of Grant and the termination date, divided by (c) one thousand ninety-six (1,096); or (II) the Optionee’s Service is terminated by the Company without Cause or by the Optionee for Good Reason, then the Option may be exercised, to the extent not previously exercised, as to a number of Covered Shares equal to (a) total number of Covered Shares multiplied by (b) (i) the number of days elapsed between the Date of Grant and the termination date, plus (ii) ninety (90) days, divided by (c) one thousand ninety-six (1,096) days; by way of example, if Optionee’s Service is terminated by the Company without Cause or by the Optionee for Good reason on the date that is five hundred (500) days after the date of Grant, the Option will be exercisable as to 53.83% (590/1096) of the Covered Shares minus any shares as to which the Option previously has been exercised.  In the event of a Change of Control on or after the first anniversary of the Grant Date, but prior to (x) termination of Participant’s Service, and (y) the third anniversary of the Date of Grant, the Option will be exercisable as as described in Section 13.2 of the Company’s Amended and Restated 2013 Stock Incentive Plan.  If Optionee’s Service is terminated by the Company without Cause or by the Optionee for Good Reason within 180 days prior to a Change of Control occurring on or after the first anniversary of the Grant Date, the Option will be exercisable as to all of the Covered Shares immediately prior to consummation of such Change of Control.  If Optionee’s Service is terminated within 180 days after a Change of Control occurring on or after the first anniversary of the Grant Date, and Optionee has been granted a substantially equivalent award of options to purchase Acquiror’s equity securities in substitution of any portion of the Option (the “Substituted Options”), the Acquiror shall be obligated to pay Optionee an amount equal to the difference between the Change of Control proceeds Optionee would have received had the Option been exercised as to all the Covered Shares immediately prior to closing of such Change of Control, and the amount of Change of Control proceeds actually received by Optionee as a result of exercising the Option immediately prior to such Change of Control, provided that Optionee forfeits all of the Substituted Options issued to him by the Acquiror.

 

3.3     Nontransferability. The Option is not transferable by the Optionee other than by will or by the laws of descent and distribution, and is exercisable, during the Optionee’s lifetime, only by the Optionee, or, in the event of the Optionee’s death or disability, by the Optionee’s legal representative.  Optionee acknowledges and agrees that any Shares acquired by the Optionee hereunder may not be transferred by Optionee during the term of the Employment Agreement, whether through sale or otherwise, without the prior written approval of the Committee.

 

3.4     Payment of the Exercise Price.  The Optionee, upon exercise, in whole or in part, of the Option, may pay the Exercise Price by any or all of the following means, either alone or in combination:

 

(a)     cash or check payable to the order of the Company;

 

(b)     if at the time of exercise, the Ordinary Shares are listed for trading on a national securities exchange, delivery (either actual or constructive) of shares of unencumbered Ordinary Shares (provided that such shares, if acquired under the Option or under any other option or award granted under the Plan or any other plan sponsored or mentioned by the Company, have been held by the Optionee for such period, if any, as the Committee may specify) that have an aggregate Fair Market Value on the Date of Exercise equal to that portion of the Exercise Price being paid by delivery of such shares;

 

(c)     if at the time of exercise, the Ordinary Shares are listed for trading on a national securities exchange and in accordance with such rules as may be specified by the Committee, delivery to the Company of a properly executed exercise notice and irrevocable instructions to a registered securities broker promptly to deliver to the Company cash equal to the Exercise Price for that portion of the Option being exercised; or

 

4

(d)     if at the time of exercise the Ordinary Shares are listed for trading on a national securities exchange, by directing the Company to withhold from the Ordinary Shares to be issued upon exercise of the Option (or portion thereof) a number of Ordinary Shares having a Fair Market Value not in excess of the aggregate Exercise Price of the Option (or portion thereof) being exercised, with payment of the balance of the Exercise Price being made pursuant to Section 3.4(a), 3.4(b) and/or Section 3.4(c).

 

4.     Exercise.

 

4.1     Notice.  The Option shall be exercised, in whole or in part by the delivery to the Company of written notice in the form of Exhibit A hereto.

 

4.2     Withholding.  The Company’s obligation to issue or deliver Ordinary Shares upon the exercise of the Option shall be subject to the satisfaction of any applicable federal, state and local tax withholding requirements.  The Optionee may satisfy any such withholding obligation by any of the following means or by a combination of such means: (a) tendering a cash payment or (b) if at the time the withholding obligation arises, the Ordinary Shares are listed for trading on a national securities exchange, authorizing the Company to withhold Ordinary Shares from the shares otherwise issuable to the Optionee upon exercise of the Option.  For purposes of this Section 4.2, Ordinary Shares that are withheld or delivered to satisfy applicable withholding taxes shall be valued at their Fair Market Value on the date the withholding tax obligation arises, and in no event shall the aggregate Fair Market Value of the Ordinary Shares withheld pursuant to this Section 4.2 exceed the minimum amount of taxes required to be withheld in connection with exercise of the Option.

 

4.3     Effect.  The exercise, in whole or in part, of the Option shall cause a reduction in the number of Covered Shares as to which the Option may be exercised in an amount equal to the number of Ordinary Shares as to which the Option is exercised.

 

4.4     Legends.  The Optionee agrees that the certificates evidencing the Ordinary Shares issued upon exercise of the Option may include any legend which the Committee deems appropriate to reflect the transfer and other restrictions contained in the Plan, this Agreement, or to comply with applicable laws.

 

4.5     Rights as Stockholder.  The Optionee shall have no rights as a stockholder with respect to any Ordinary Shares subject to the Option until and unless such shares are issued to the Optionee pursuant to this Agreement.

 

4.6     Service.  Neither the grant of the Option evidenced by this Agreement nor any term or provision of this Agreement shall constitute or be evidence of any understanding, express or implied, on the part of the Company to employ or retain the Optionee for any period.

 

4.7     Subject to the Plan.  The Option evidenced by this Agreement and the exercise thereof are subject to the terms and conditions of the Plan, which is incorporated by reference and made a part hereof, but the terms of the Plan shall not be considered an enlargement of any rights or benefits under this Agreement.  In addition, the Option (including its exercise) is subject to any rules and regulations promulgated by the Committee.

 

5

4.8     Governing Law.  The validity, construction, interpretation and enforceability of this agreement shall be determined and governed by the laws of the State of Florida without giving effect to the principles of conflicts of laws.

 

5.     Stockholder Approval.  Optionee acknowledges that the Plan and this Agreement require stockholder approval at the next annual or special meeting of stockholders following adoption and approval by the Board.  If the adoption of the Plan and approval of this Agreement is not approved by the Company’s stockholders within one (1) year following the Date of Grant, this Agreement shall be cancelled and void ab initio immediately following such next annual or special meeting of stockholders.

 

6.     Severability.  If any provision of this Agreement shall be held to be invalid, illegal or unenforceable in any material respect, such provision shall be replaced with a provision that is as close as possible in effect to such invalid, illegal or unenforceable provision, and still be valid, legal and enforceable, and the validity, legality and enforceability of the remainder of this Agreement shall not in any way be affected or impaired thereby.

 

IN WITNESS WHEREOF, the Company has caused this Agreement to be signed on its behalf by the undersigned, thereunto duly authorized, effective as of the Date of Grant.

 

	
 

	
MAGICJACK VOCALTEC LTD.

 

By:  /s/ Don Carlos Bell III 

        Don Carlos Bell III

        Chief Executive Officer

 

Accepted and agreed to as of the Date of Grant:

	
 

	
/s/ Thomas E. D. Fuller

Thomas E. D. Fuller

6

“EXHIBIT A”

EXERCISE OF OPTION

Board of Directors

magicJack VocalTec Ltd.

 

Ladies and Gentlemen:

6.1     The undersigned, the Optionee under the Stock Option Agreement (“Agreement”) identified as Option No. ____—___ granted pursuant to the means the Amended and Restated magicJack Vocaltec Ltd. 2013 Stock Incentive Plan, hereby irrevocably elects to exercise the Option granted in the Agreement to purchase ___ shares of Ordinary Shares (the “Option Shares”), and herewith makes payment of $                  in the form of (check all that apply and if more than one is checked, indicate the amount to be paid by each payment method):

 

	
☐  Cash or Check:

	                                                   
	
☐  Ordinary Shares:

	                                                    
	
☐  Brokerage Transaction:

	                                                    
	
☐  Withholding of Ordinary Shares:

	                                                    

  The undersigned hereby elects to satisfy applicable withholding requirements by (check all that apply and, if more than one is checked, indicate the amount to be withheld by each withholding method):

	
☐  Cash or Check:

	                                                     
	
☐  Withholding of Ordinary Shares:

	                                                     

Capitalized terms used herein but not defined shall have the meanings ascribed to such terms in the Agreement:

 

Date:                                                                                                                                                                                                               

                                                                                                                                                         (Signature of Optionee)

 

Date received by magicJack VocalTec Ltd:                                        

7

 

Received by:  

Note: Ordinary Shares being delivered in payment of all or any part of the Exercise Price must be represented by certificates registered in the name of the Optionee and duly endorsed by the Optionee and by each and every other co-owner in whose name the shares may also be registered.

8

 

Amendment to Option Agreement

 

This Option Agreement Amendment (“Amendment”) is entered into by and between MagicJack VocalTec Ltd., a company formed under the laws of Israel (“Company”) and Thomas E.D. Fuller  (“Executive”) as of July 27, 2017, for the purpose of amending that certain Stock Option Agreement by and between the Company and Executive with a grant date of May 8, 2017 (the “Option Agreement”) issued pursuant to the Company’s Amended and Restated 2013 Stock Incentive Plan (the “Plan”).

 

RECITALS:

 

		A.	
The Option Agreement was entered into on May 8, 2017 pursuant to resolutions of the Compensation Committee and Board of Directors of the Company of even date;

 

		B.	
The resolutions of the Committee and the Board provided that the Option Agreement was subject to the approval by the Company’s shareholders of amendments to Plan, including an amendment to increase the number of shares available for issuance under the Plan;

 

		C.	
Section 5 of the Option Agreement mistakenly provides that the Option Agreement is also subject to approval of the Company’s shareholders; and

 

		D.	
The Company and Executive wish to amend the Option Agreement to remove the mistaken reference to the Agreement being subject to shareholder approval.

 

In consideration of the foregoing, the mutual obligations of the Company and the Executive under the Option Agreement, and other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the Company and the Executive agree to amend the Option Agreement as follows:

 

Section 5 of the Option Agreement is hereby deleted and replaced with the following:

 

5. Stockholder Approval. Optionee acknowledges that the Plan requires stockholder approval at the next annual or special meeting of stockholders following adoption and approval by the Board. If the adoption of the Plan is not approved by the Company’s stockholders within one (1) year following the Date of Grant, this Agreement shall be cancelled and void ab initio immediately following such next annual or special meeting of stockholders.

 Other than as modified by this Amendment, the Option Agreement remains unchanged.

MAGICJACK VOCALTEC LTD.

 

By: /s/ Don Carlos Bell III                                                                           /s/ Thomas E.D. Fuller

       Don Carlos Bell III Thomas E.D. Fuller

       Chief Executive Officer

9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00273-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00273-of-00352.parquet"}]]