Document:

exhibit_10-2.htm

Exhibit 10.2

MAGICJACK VOCALTEC LTD.

2013 STOCK INCENTIVE PLAN

 

1.           Definitions.  In the Plan, except where the context otherwise indicates, the following definitions shall apply:

 

1.1.           “Affiliate” means a corporation, partnership, business trust, limited liability company, or other form of business organization at least a majority of the total combined voting power of all classes of stock or other equity interests of which is owned by the Company, either directly or indirectly, and any other entity, designated by the Committee, in which the Company has a significant interest.

 

1.2.           “Agreement” means an agreement or other document evidencing an Award.  An Agreement may be in written or such other form as the Committee may specify in its discretion, and the Committee may, but need not, require a Participant to sign an Agreement.

 

1.3.           “Award” means a grant of an Option, Restricted Stock, Restricted Stock Unit, a Performance Award or an Other Stock-Based Award.

 

1.4.           “Board” means the Board of Directors of the Company.

 

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

 

1.6.           “Committee” means the Compensation Committee of the Board or such other committee(s), subcommittee(s) or person(s) the Board or an authorized Committee of the Board appoints to administer the Plan or to make and/or administer specific Awards hereunder.  If no such appointment is in effect at any time, “Committee” shall mean the Board.  Notwithstanding the foregoing, “Committee” means the Board for purposes of granting Awards to members of the Board who are not Employees, and administering the Plan with respect to those Awards, unless the Board determines otherwise.

 

1.7.           “Company” means magicJack VocalTec Ltd., and any successor thereto.

 

1.8.           “Date of Exercise” means the date on which the Company receives notice of the exercise of an Option in accordance with Section 7.1.

 

1.9.           “Date of Grant” means the date on which an Award is granted under the Plan.

 

1.10.           “Eligible Person” means any person who is (a) an Employee, (b) a member of the Board or the board of directors of an Affiliate, or (c) a consultant, or independent contractor to the Company or an Affiliate.

 

  

  

  

 

1.11.           “Employee” means any person who the Committee determines to be an employee of the Company or an Affiliate.

 

1.12.           “Exercise Price” means the price per Share at which an Option may be exercised.

 

1.13.            “Fair Market Value” means, as of any date on which the Shares are listed or quoted on a securities exchange or quotation system, and except as otherwise determined by the Committee, the closing sale price of a Share as reported on such securities exchange or quotation system as of the relevant date, and if the Shares are not listed or quoted on a securities exchange or quotation system, then an amount equal to the then fair market value of a Share as determined by the Committee pursuant to a reasonable method adopted in good faith for such purpose; provided, however, that in the case of the grant of an Nonqualified Stock Option that is intended to not provide for a deferral of compensation within the meaning of Section 409A of the Code, Fair Market Value shall determined pursuant to a method permitted by Section 409A of the Code for determining the fair market value of stock subject to a nonqualified stock option that does not provide for a deferral of compensation under Section 409A of the Code.

 

1.14.           “Incentive Stock Option” means an Option that the Committee designates as an incentive stock option under Section 422 of the Code.

 

1.15.           “Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.

 

1.16.           “Option” means an option to purchase Shares granted pursuant to Section 6.

 

1.17.           “Option Period” means the period during which an Option may be exercised.

 

1.18.           “Ordinary Shares” means the Company’s ordinary shares, no par value.

 

1.19.           “Other Stock-Based Award” means an Award granted pursuant to Section 12.

 

1.20.           “Participant” means an Eligible Person who has been granted an Award hereunder.

 

1.21.           “Performance Award” means a performance award granted pursuant to Section 10.

 

1.22.           “Performance Goals” means performance goals established by the Committee which may be based on earnings or earnings growth, sales, revenues, expenses (including plant costs and sales and general administrative expenses), return on assets, cash flow, total shareholder return, equity or investment, regulatory compliance, satisfactory internal or external audits, improvement of financial ratings, achievement of balance sheet or income statement objectives, implementation or completion of one or more projects or transactions (including mergers, acquisitions, dispositions, and restructurings), working capital, or any other objective goals the Committee establishes, and which may be absolute in their terms or measured against or in relationship to other companies comparably, similarly or otherwise situated.  Performance Goals may be particular to an Eligible Person or the department, branch, Affiliate, or division in which the Eligible Person works, or may be based on the performance of the Company, one or more Affiliates, or the Company and one or more Affiliates, and may cover such period as may be specified by the Committee.

 

  

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1.23.           “Plan” means this magicJack VocalTec, Ltd. 2013 Stock Incentive Plan, as amended from time to time.

 

1.24.           “Restricted Stock” means Shares granted pursuant to Section 8.

 

1.25.           “Restricted Stock Units” means an Award providing for the contingent grant of Shares (or the cash equivalent thereof) pursuant to Section 9.

 

1.26.           “Section 422 Employee” means an Employee who is employed by the Company or a “parent corporation” or “subsidiary corporation” (each as defined in Sections 424(e) and (f) of the Code) with respect to the Company, including a “parent corporation” or “subsidiary corporation” that becomes such after adoption of the Plan.

 

1.27.           “Share” means an Ordinary Share.

 

1.28.           “Ten-Percent Stockholder” means a Section 422 Employee who (applying the rules of Section 424(d) of the Code) owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or a “parent corporation” or “subsidiary corporation” (each as defined in Sections 424(e) and (f) of the Code) with respect to the Company.

 

Unless the context expressly requires the contrary, references in the Plan to (a) the term “Section” refers to the sections of the Plan, and (b) the word “including” means “including (without limitation).”

 

2.           Purpose.  The Plan is intended to assist the Company and its Affiliates in attracting and retaining Eligible Persons of outstanding ability and to promote the alignment of their interests with those of the stockholders of the Company and the stockholders of its Affiliates.

 

3.           Administration.  The Committee shall administer the Plan and shall have plenary authority, in its discretion, to grant Awards to Eligible Persons, subject to the provisions of the Plan.  The Committee shall have plenary authority and discretion, subject to the provisions of the Plan, to determine the Eligible Persons to whom it grants Awards, the terms (which terms need not be identical) of all Awards, including without limitation, the Exercise Price of Options, the time or times at which Awards are granted, the number of Shares covered by Awards, whether an Option shall be an Incentive Stock Option or a Nonqualified Stock Option, any exceptions to nontransferability, any Performance Goals applicable to Awards, any provisions relating to vesting, and the periods during which Options may be exercised and Restricted Stock shall be subject to restrictions.  In making these determinations, the Committee may take into account the nature of the services rendered or to be rendered by Award recipients, their present and potential contributions to the success of the Company and its Affiliates, and such other factors as the Committee in its discretion shall deem relevant.  Subject to the provisions of the Plan, the Committee shall have plenary authority and discretion to interpret the Plan and Agreements, prescribe, amend and rescind rules and regulations relating to them, and make all other determinations deemed necessary or advisable for the administration of the Plan and Awards granted hereunder.  The determinations of the Committee on the matters referred to in this Section 3 shall be binding and final.  The Committee may delegate its authority under this Section 3 and the terms of the Plan to such extent it deems desirable and is consistent with the requirements of applicable law.

 

  

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4.           Eligibility.  Awards may be granted only to Eligible Persons, provided that Incentive Stock Options may be granted only to Eligible Persons who are Section 422 Employees.

 

5.           Stock Subject to Plan.

 

5.1.           Subject to adjustment as provided in Section 13, the maximum number of Shares that may be issued pursuant to Awards (including Incentive Stock Options) under the Plan is 2,250,000 Shares.  Shares issued under the Plan may, in whole or in part, be authorized but unissued Shares or Shares that shall have been, or may be, reacquired by the Company in the open market, in private transactions, or otherwise.

 

5.2.           If an Option expires or terminates for any reason without having been fully exercised, if shares of Restricted Stock are forfeited, or if Shares covered by an Award are not issued or are forfeited, the unissued or forfeited Shares that had been subject to the Award shall be available for the grant of additional Awards; provided, however, that in the case of Shares that are withheld (or delivered) to pay the Exercise Price of an Option or withholding taxes pursuant to Sections 7.2, 7.3, or 18, no such withheld (or delivered) Shares shall be available for the grant of Awards hereunder.

 

5.3.           Subject to adjustment as provided in Section 13, the maximum number of Shares with respect to which an Employee may be granted Awards under the Plan (whether settled in Shares or the cash equivalent thereof) during any calendar year is 2,000,000.  The maximum number of Shares with respect to which an Employee has been granted Awards shall be determined in accordance with Section 162(m) of the Code.

 

6.           Options.

 

6.1.           Options granted under the Plan shall be either Incentive Stock Options or Nonqualified Stock Options, as designated by the Committee.  Each Option granted under the Plan shall be identified as either a Nonqualified Stock Option or an Incentive Stock Option, and each Option shall be evidenced by an Agreement that specifies the terms and conditions of the Option.  Options shall be subject to the terms and conditions set forth in this Section 6, the Agreement, and such other terms and conditions not inconsistent with the Plan as the Committee may specify.  The Committee, in its discretion, may condition the grant or vesting of an Option upon the achievement of one or more specified Performance Goals to be set forth in the applicable Agreement.

 

  

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6.2.           The Exercise Price of an Option granted under the Plan shall not be less than 100% of the Fair Market Value of a Share on the Date of Grant.  Notwithstanding the foregoing, in the case of an Incentive Stock Option granted to an Employee who, on the Date of Grant is a Ten-Percent Shareholder, the Exercise Price shall not be less than 110% of the Fair Market Value of a Share on the Date of Grant.

 

6.3.           The Committee shall determine the Option Period for an Option, which shall be specifically set forth in the Agreement, provided that an Option shall not be exercisable after ten years (five years in the case of an Incentive Stock Option granted to an Employee who on the Date of Grant is a Ten-Percent Stockholder) from its Date of Grant.

 

7.           Exercise of Options.

 

7.1.         Subject to the terms of the applicable Agreement, an Option may be exercised, in whole or in part, by delivering to the Company a notice of the exercise, in such form as required by the applicable Agreement or as the Committee may otherwise prescribe, accompanied by (a) full payment for the Shares with respect to which the Option is exercised or (b) to the extent provided in the applicable Agreement or otherwise authorized by the Committee, irrevocable instructions to a broker to deliver promptly to the Company cash equal to the exercise price of the Option.

 

7.2.           To the extent provided in the applicable Agreement or otherwise authorized by the Committee, payment may be made by delivery (including constructive delivery) of Shares (provided that such Shares, if acquired pursuant to an Option or other Award granted hereunder or under any other compensation plan maintained by the Company or any Affiliate, have been held by the Participant for such period, if any, as the Committee may specify) valued at Fair Market Value on the Date of Exercise.

 

7.3.           To the extent provided in the applicable Agreement, an Option may be exercised by directing the Company to withhold from the Shares to be issued upon exercise of the Option (or portion thereof) being exercised a number of 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, if any, being made pursuant to Section 7.1 and/or Section 7.2.

 

8.           Restricted Stock Awards.  Each grant of Restricted Stock under the Plan shall be subject to an Agreement specifying the terms and conditions of the Award.  Restricted Stock granted under the Plan shall consist of Shares that are restricted as to transfer, subject to forfeiture and/or repurchase, and subject to such other terms and conditions as the Committee may specify.  Such terms and conditions may provide, in the discretion of the Committee, for the lapse of such transfer restrictions or forfeiture provisions to be contingent upon the achievement of one or more specified Performance Goals.

 

  

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9.           Restricted Stock Unit Awards.  Each grant of Restricted Stock Units under the Plan shall be evidenced by an Agreement that (a) provides for the issuance of Shares (or the cash equivalent thereof) to a Participant at such time(s) as the Committee may specify and (b) contains such other terms and conditions as the Committee may specify, including without limitation, terms that condition the issuance of Restricted Stock Unit Awards upon the achievement of one or more specified Performance Goals.

 

10.          Performance Awards.  Each Performance Award granted under the Plan shall be evidenced by an Agreement that (a) provides for the payment of cash or issuance of Shares to a Participant contingent upon the attainment of one or more specified Performance Goals over such period as the Committee may specify, and (b) contains such other terms and conditions as the Committee may specify.  If the terms of a Performance Award provide for payment in the form of Shares, for purposes of Section 5.3, the Performance Award shall be deemed to cover a number of Shares equal to the maximum number of Shares that may be issued upon payment of the Award.  The maximum cash amount payable to any Employee pursuant to all Performance Awards granted to an Employee during a calendar year shall not exceed $2,000,000.  The Committee may, in its discretion, grant Performance Awards pursuant to which the amount and payment of the Award is determined by reference to a percentage of a bonus or incentive pool that applies to more than one Participant, and the amount of the bonus or incentive pool may, in the discretion of the Committee, be either fixed in amount or determined based upon the achievement of one or more Performance Goals.

 

11.           Dividends and Dividend Equivalents.  The terms of an Award may provide a Participant with the right, subject to such terms and conditions as the Committee may specify (including without limitation, terms that condition the issuance of grant, vesting or payment of dividends or dividend equivalents upon the achievement of one or more specified Performance Goals), to receive dividend payments or dividend equivalent payments with respect to Shares covered by an Award, which payments may be either made currently or credited to an account established for the Participant, and may be settled in cash or Shares, as determined by the Committee.

 

12.           Other Stock-Based Awards.  The Committee may in its discretion grant stock-based awards of a type other than those otherwise provided for in the Plan, including the issuance or offer for sale of unrestricted Shares (“Other Stock-Based Awards”).  Other Stock-Based Awards shall cover such number of Shares and have such terms and conditions as the Committee shall determine, including terms that condition the payment or vesting the Other Stock-Based Award upon the achievement of one or more Performance Goals.

 

13.           Capital Events and Adjustments; Certain Transactions.

 

13.1.           In the event of any change in the outstanding Ordinary Shares by reason of any stock dividend, stock split, reverse stock split, spin-off, recapitalization, reclassification, combination or exchange of shares, merger, consolidation, liquidation or the like, the Committee shall provide for a substitution for or adjustment in (a) the number and class of securities subject to outstanding Awards or the type of consideration to be received upon the exercise or vesting of outstanding Awards, (b) the Exercise Price of Options, (c) the aggregate number and class of Shares for which Awards thereafter may be granted under the Plan and (d) the maximum number of Shares with respect to which an Employee may be granted Awards during the period specified in Section 5.3.

 

  

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13.2.           Any provision of the Plan or any Agreement to the contrary notwithstanding, in the event of (a) a merger or consolidation to which the Company is a party or (b) any sale, disposition or exchange of at least 50% of the Company’s outstanding securities or all or all or substantially all of the Company’s assets, in either case for cash, securities or other consideration (the transactions described in the preceding clauses (a) and (b) each being  a “Transaction”), the Committee shall take such actions, and make such changes and adjustments to outstanding Awards as it may deem equitable, and may, in its discretion, cause any Award granted hereunder (i) to vest in whole or in part, (ii) to be assumed or continued by any successor or acquiring entity, and/or (iii) to be canceled, in whole or in part, in consideration of a payment (or payments), in such form as the Committee may specify, equal to the fair value of the canceled portion of the Award.  The fair value of an Option shall be deemed to be equal to the product of (a) the number of Shares the Option covers (and has not previously been exercised) and (b) the excess, if any, of the Fair Market Value of a Share as of the date of cancellation over the Exercise Price of the Option.  For sake of clarity and notwithstanding anything to the contrary herein, (a) such fair value may be zero if the value of a Share is equal to or less than the Exercise Price and (b) payments in cancellation of an Award in connection with a Transaction may be delayed to the same extent that payment of consideration to holders of Shares in connection with the Transaction is delayed as a result of escrows, earn-outs, holdbacks, or any other contingencies.

 

13.3.           The Committee need not take the same action under this Section 13 with respect to all Awards or with respect to all Participants and may, in its discretion, take different actions with respect to vested and unvested portions of an Award.  No fractional shares or securities shall be issued pursuant to any adjustment made pursuant to this Section 13, and any fractional shares or securities resulting from any such adjustment shall be eliminated by rounding downward to the next whole share or security, either with or without payment in respect thereof, as determined by the Committee.  All determinations required to be made under this Section 13 shall be made by the Committee in its discretion and shall be final and binding.

 

14.           Termination or Amendment.  The Board may amend or terminate the Plan in any respect at any time; provided, however, that after the stockholders of the Company have approved the Plan, the Board shall not amend or terminate the Plan without approval of (a) the Company’s stockholders to the extent applicable law or regulations or the requirements of the principal exchange or interdealer quotation system on which the Ordinary Shares are listed or quoted, if any, requires stockholder approval of the amendment or termination, and (b) each affected Participant if the amendment or termination would adversely affect the Participant’s rights or obligations under any Award granted prior to the date of the amendment or termination.

 

  

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15.           Modification, Substitution of Awards.

 

15.1.           Subject to the terms and conditions of the Plan, the Committee may modify the terms of any outstanding Awards; provided, however, that (a) no modification of an Award shall, without the consent of the Participant, alter or impair any of the Participant’s rights or obligations under such Award and (b) subject to Section 13, in no event may (i) an Option be modified to reduce the Exercise Price of the Option or (ii) an Option be cancelled or surrendered in consideration for the grant of a new Option with a lower Exercise Price.

 

15.2.           Anything contained herein to the contrary notwithstanding, Awards may, at the discretion of the Committee, be granted under the Plan in substitution for stock options and other awards covering capital stock of another corporation which is merged into, consolidated with, or all or a substantial portion of the property or stock of which is acquired by, the Company or an Affiliate.  The terms and conditions of the substitute Awards so granted may vary from the terms and conditions set forth in the Plan to such extent as the Committee may deem appropriate in order to conform, in whole or part, to the provisions of the awards in substitution for which they are granted.  Such substitute Awards shall not be counted toward the Share limit imposed by Section 5.3, except to the extent the Committee determines that counting such Awards is required in order for Awards granted hereunder to be eligible to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code.

 

16.           Foreign Employees.  Without amendment of the Plan, the Committee may grant Awards to Eligible Persons who are subject to the laws of foreign countries or jurisdictions on such terms and conditions different from those specified in the Plan as may in the judgment of the Committee be necessary or desirable to foster and promote achievement of the purposes of the Plan.  The Committee may make such modifications, amendments, procedures, sub-plans and the like as may be necessary or advisable to comply with provisions of laws of other countries or jurisdictions in which the Company or any Affiliate operates or has employees.

 

17.           Stockholder Approval.  The Plan, and any amendments hereto requiring stockholder approval pursuant to Section 14, are subject to approval by vote of the stockholders of the Company at the next annual or special meeting of stockholders following adoption by the Board.  If the adoption of the Plan is not so approved by the Company’s stockholders, any Awards granted under the Plan shall be cancelled and void ab initio immediately following such next annual or special meeting of stockholders.

 

18.           Withholding.  The Company’s obligation to issue or deliver Shares or pay any amount pursuant to the terms of any Award granted hereunder shall be subject to satisfaction of applicable federal, state, local, and foreign tax withholding requirements.  To the extent provided in the applicable Agreement, and in accordance with such rules as the Committee may prescribe, a Participant may satisfy any withholding tax requirements by one or any combination of the following means: (a) tendering a cash payment, (b) authorizing the Company to withhold Shares otherwise issuable to the Participant, or (c) delivering to the Company already-owned and unencumbered Shares.

 

  

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19.           Term of Plan.  Unless sooner terminated by the Board pursuant to Section 14, the Plan shall terminate on the date that is ten years after the earlier of the date that the Plan is adopted by the Board or approved by the Company’s stockholders, and no Awards may be granted or awarded after such date.  The termination of the Plan shall not affect the validity of any Award outstanding on the date of termination.

 

20.           Indemnification of Committee.  In addition to such other rights of indemnification as they may have as members of the Board or Committee, the Company shall indemnify members of the Committee against all reasonable expenses, including attorneys’ fees, actually and reasonably incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan or any Award granted hereunder, and against all amounts reasonably paid by them in settlement thereof or paid by them in satisfaction of a judgment in any such action, suit or proceeding, if such members acted in good faith and in a manner which they believed to be in, and not opposed to, the best interests of the Company.

 

21.           General Provisions.

 

21.1.           The establishment of the Plan shall not confer upon any Eligible Person any legal or equitable right against the Company, any Affiliate or the Committee, except as expressly provided in the Plan or the applicable Agreement.  Participation in the Plan shall not give an Eligible Person any right to be retained in the service of the Company or any Affiliate.

 

21.2.           Neither the adoption of the Plan nor its submission to the Company’s stockholders shall be taken to impose any limitations on the powers of the Company or its Affiliates to issue, grant or assume options, warrants, rights, restricted stock or other awards otherwise than under the Plan, or to adopt other stock option, restricted stock, or other plans, or to impose any requirement of stockholder approval upon the same.

 

21.3.           The interests of any Eligible Person under the Plan and/or any Award granted hereunder are not subject to the claims of creditors and may not, in any way, be transferred, assigned, alienated or encumbered except to the extent provided in an Agreement.

 

21.4.           The Plan shall be governed, construed and administered in accordance with the laws of the State of Florida, without giving effect to the conflict of law principles.

 

21.5.           The Committee may require each person acquiring Shares pursuant to Awards granted hereunder to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to distribution thereof.  The certificates for such Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.  All certificates for Shares issued pursuant to the Plan shall be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Ordinary Shares are then listed or interdealer quotation system upon which the Ordinary Shares are then quoted, and any applicable federal or state securities laws.  The Committee may place a legend or legends on any such certificates to make appropriate reference to such restrictions.

 

  

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21.6.           The Company shall not be required to issue any certificate or certificates for Shares with respect to Awards granted under the Plan, or record any person as a holder of record of such Shares, without obtaining, to the complete satisfaction of the Committee, the approval of all regulatory bodies the Committee deems necessary, and without complying to the Board’s or Committee’s complete satisfaction, with all rules and regulations under federal, state or local law the Committee deems applicable.

 

21.7.           To the extent that the Plan provides for issuance of stock certificates to reflect the issuance of Shares, the issuance may be effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of any stock exchange or automated dealer quotation system on which the Shares are traded.    No fractional Shares shall be issued or delivered pursuant to the Plan or any Award.  The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of any fractional Shares or whether any fractional Shares or any rights thereto shall be forfeited or otherwise eliminated.

 

10exhibit_10-3.htm

Exhibit 10.3

OPTION NUMBER: 001

NAME OF OPTIONEE:    Gerald Vento

DATE OF GRANT:           April 2, 2013

EXERCISE PRICE:             $14.95

COVERED SHARES:         722,782

 

MAGICJACK VOCALTEC LTD.

2013 LONG-TERM 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 if, 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; (ii) a majority of the members of the Board are replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of such Board before the date of such appointment or election; or (iii) 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 5.1 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 the Optionee’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 the Optionee, 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 Section 4 hereof or 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.

 

  

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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 magicJack Vocaltec Ltd. 2013 Long-Term Incentive Plan.

 

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 December 31, 2013;

 

(b)      beginning December 31, 2013, the Option may be exercised as to thirty three and one-third percent (33-1/3%) of the Covered Shares;

 

(c)      beginning on December 31, 2014,  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 December 31, 2015, the Option may be exercised as to all of the Covered Shares.

 

Notwithstanding the foregoing, if the Optionee’s Service is terminated by the Company without Cause or by the Optionee for Good Reason, 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 January 1, 2013 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 January 1, 2013, the Option will be exercisable as to 53.88% (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 or termination of the Optionee’s Service by reason of Disability or death, the Option shall thereupon become exercisable at any time prior to the Date of Expiration, as to the full number of Covered Shares.

 

  

3

  

 

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

 

(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).

 

  

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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.

 

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 so approved by the Company’s stockholders, this Agreement shall be cancelled and void ab initio immediately following such next annual or special meeting of stockholders.

 

  

5

  

 

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/ Donald Burns	 
	 	 	Donald Burns	 
	 	 	Chairman	 

 

Accepted and agreed to as of the Date of Grant:

 

	
 

	
By: 

	/s/ Gerald T. Vento	 
	 	 	
Gerald T. Vento

	 

  

6

  

 

“EXHIBIT A”

EXERCISE OF OPTION

Board of Directors

magicJack VocalTec Ltd.

Ladies and Gentlemen:

The undersigned, the Optionee under the Stock Option Agreement (“Agreement”) identified as Option No. ____—___ granted pursuant to the 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:                                                                                                

 

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.

 

7

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