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Exhibit 10.1

 

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“ Agreement ”) is hereby made and entered into as of May 10 th , 2013, to be effective as of the Effective Date (as defined in Section 17 below), by and between magicJack Vocaltec Ltd. , a company formed under the laws of the State of Israel, and all of its direct and indirect subsidiaries (collectively, the “ Company ”), and Peter J. Russo (“ Russo ”).

Background

Russo has served as the Company’s Chief Financial Officer. Russo and Company have mutually agreed to terminate such engagement on the terms and conditions provided for in this Agreement. In connection with the termination of such engagement and as partial consideration for this Agreement, Russo and Company have agreed that the Company shall engage Russo to provide certain transition and advisory services for the fees and on the terms and conditions set forth in a Consulting Agreement dated on or about the date hereof (the “ Consulting Agreement ”)

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

1.            Russo’s Termination and Departure Date . Russo’s existing engagement with the Company is terminated effective May 10 th , 2013 (“ Departure Date ”). Within three (3) business days after the Effective Date (as defined in Section 17 hereof), and subject to Russo’s execution of the Consulting Agreement, the Company will pay Russo (a) a lump sum payment of $750,000, by wire transfer of immediately available funds to an account designated by Russo, in writing, and (b) Russo will receive a final payment of compensation earned through the Departure Date, including payment of accrued and unused vacation in the amount of $48,000 and any reimbursable expenses due and owing to Russo.

2.            Consulting Agreement .  As additional consideration for Russo entering into this Agreement and fully abiding by its terms, and provided Russo has not revoked the Agreement as described in Paragraph 17 below, the Company agrees to enter into the Consulting Agreement with Russo.

3.            No Other Compensation or Benefits Owing . Russo acknowledges and agrees that, except as otherwise provided for in this Agreement: (a) Russo is not and will not be due any other compensation or benefits; and (b) Russo’s participation in all of the benefit plans of the Company (if any and if applicable), or any of its subsidiaries, divisions or affiliates, will cease as of the Departure Date; provided, however, that the Company will provide Russo with information regarding the continuation of health insurance under COBRA (if applicable).

4.            No Other Representations . Russo represents and warrants that no promise or inducement has been offered or made except as herein set forth and that Russo is entering into and executing this Agreement without reliance on any statement or representation not set forth within this Agreement by the Company, or any person(s) acting on its behalf.

 

5.            Non-Assignment of Rights . Russo represents and warrants that Russo has not sold, assigned, transferred, conveyed or otherwise disposed of to any third party, by operation of law or otherwise, any action, cause of action, debt, obligation, contract, agreement, covenant, guarantee, judgment, damage, claim, counterclaim, liability or demand of any nature whatsoever relating to any matter covered in this Agreement.

6.            Status . Russo understands and agrees that (a) Russo’s existing engagement with the Company ended effective as of the Departure Date; and (b) the Company has no obligation to reinstate, rehire, reemploy, recall, or hire Russo in the future.

7.            Disclosure of Any Material Information . As of the date Russo signs this Agreement, Russo represents and warrants that Russo has disclosed to the Company any information in Russo’s possession concerning any conduct involving the Company that Russo has any reason to believe may be unlawful, or violates any of the Company’s policies or procedures, or would otherwise reflect poorly on the Company in any respect.

8.            Return of Property . Except as otherwise agreed to in connection with the Consulting Agreement, Russo agrees to return all property of the Company, regardless of the type or medium (i.e., computer disk, CD-ROM) upon which it is maintained, including, but not limited to, all files, documents, correspondence, memoranda, customer and client lists, prospect lists, subscription lists, contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans, employee records, technical processes, designs and design projects, inventions, research project presentations, proposals, quotations, data, notes, records, photographic slides, photographs, posters, manuals, brochures, internal publications, books, films, drawings, videos, sketches, plans, outlines, computer disks, computer files, work plans, specifications, credit cards, keys (including elevator, pass, building and door keys), identification cards, and any other documents, writings and materials that Russo came to possess or otherwise acquired as a result of and/or in connection with Russo’s employment with the Company. Russo agrees to settle any outstanding balance due on any Company credit cards and accounts. Should Russo later find any Company property in Russo’s possession, Russo agrees to immediately return it. Russo further agrees not to maintain any copies of said property or make any copies of said property available to any third-party.  The Company acknowledges and agrees that Russo will keep his Company issued laptop computer through the term of the Consulting Agreement.

9.            Non-Admission of Liability . Russo understands and agrees that this Agreement does not and shall not be deemed or construed as an admission of liability or responsibility by the Company for any purpose. Russo further agrees that nothing contained in this Agreement can be used by Russo or any other past, present or future employee in any way as precedent for future dealings with the Company or any of its subsidiaries, divisions, affiliates, successors, officers, directors, attorneys, agents or employees.

10.          Release .  In consideration of the compensation and benefits provided pursuant to this Agreement, the sufficiency of which is hereby acknowledged, Russo, for Russo and for any person who may claim by or through Russo, releases and forever discharges the Company and its past, present and future parents, subsidiaries, divisions, affiliates, predecessors, successors, officers, directors, partners, principals, administrators, trustees, benefit plans, insurers, attorneys, agents and employees (collectively, the “ Company Entities ”), from any and all claims or causes of action that Russo had, has or may have, known or unknown, relating to Russo’s engagement with and/or termination from the Company up until the date of this Agreement, including but not limited to, any claims arising under Title VII of the Civil Rights Act of 1964, as amended, Section 1981 of the Civil Rights Act of 1866, as amended, the Civil Rights Act of 1991, as amended, the Family and Medical Leave Act, the Age Discrimination in Employment Act (“ ADEA ”), as amended by the Older Workers Benefit Protection Act of 1990, the Americans with Disabilities Act, the Employee Retirement Income Security Act; claims under any other federal, state or local statute, regulation or ordinance; claims for discrimination or harassment of any kind, breach of contract or public policy, wrongful or retaliatory discharge, defamation or other personal or business injury of any kind; and any and all other claims to any form of legal or equitable relief, damages, compensation or benefits (except as set forth in subparagraph (c), below), or for attorneys fees or costs.

 

(a)            No Pending Claims/Withdrawal of Claims . Russo represents and warrants that, as of the date Russo signs this Agreement, Russo has no charges, claims or lawsuits of any kind pending against the Company or any of the Company Entities that would fall within the scope of the release set forth in Paragraph 10 above. To the extent that Russo has such pending charges, claims or lawsuits as of the date Russo signs this Agreement, Russo agrees to seek and obtain immediate dismissal with prejudice and provide written confirmation immediately (i.e., court order, and/or agency determination) as a condition precedent to the Company’s obligations under this Agreement on and after the date Russo signs this Agreement (including, but not limited to, providing any compensation or benefits under this Agreement).

(b)            Covenant Not to Sue/Future Cooperation . To the maximum extent permitted by law, Russo agrees not to sue or to institute or cause to be instituted a lawsuit in any federal, state, or local agency or court against the Company or any of the Company Entities, including, but not limited to, the claims released in Paragraph 10 of this Agreement. If Russo has any knowledge or information relevant to any pending or future litigation or investigations involving the Company, Russo agrees, at the Company’s request, to appear and give testimony at depositions and at trial or other proceedings related to such litigation. The Company shall reimburse Russo for reasonable out-of-pocket expenses, if any, actually incurred in connection with Russo’s attendance at any such proceedings.

(c)            Exclusion for Certain Claims . Notwithstanding the foregoing, the Company and Russo agree that the provisions of this Section 10 will not apply to (i) any claims arising after the date Russo signs this Agreement, (ii) any action by Russo to enforce the terms of this Agreement, (iii) any action by Russo challenging the validity of this Agreement under ADEA, or (iv) any obligation of the Company to indemnify Russo for actions or omissions of Russo as an officer of the Company on or prior to the Departure Date as set forth in the Company’s governing documents or in an agreement by and between the Company and Russo.

11.          Non-Disparagement of the Company . Russo agrees not to engage in any form of conduct or make any statements or representations that disparage or otherwise impair the reputation, goodwill or commercial interests of the Company.

 

12.          Obligations . Russo represents and warrants that Russo (i) has complied with the terms of any and all commitments and obligations to the Company in connection with Russo’s existing engagement by the Company, and (ii) shall comply with all of his commitments and obligations to the Company under the Consulting Agreement.

13.          Restrictive Covenants; Confidentiality of Agreement .

(a)          Restrictive Covenants . Russo acknowledges and affirms his obligations under Section 6 of the Consulting Agreement with respect to the restrictive covenants set forth therein; and, Russo further acknowledges and affirms that the obligations relating to Confidential Information (as defined in the Consulting Agreement) extend to Confidential Information whenever learned or acquired by Russo whether prior to or after the Effective Date of this Agreement, or the Effective Date of the Consulting Agreement (as such term is defined therein).  Russo acknowledges and agrees that the payments provided under this Agreement are being provided, in part, in consideration of Russo’s obligations under the Consulting Agreement, and that Consultant’s breach of the restrictive covenants provided under the Consulting Agreement will be considered a breach of this Agreement.

(b)            Terms of this Agreement . Russo agrees that the terms of this Agreement are confidential and shall be accorded the utmost confidentiality as “Confidential Information” under Section 6 of the Consulting Agreement. Russo agrees that the terms of this Agreement will not be disclosed by him to any third party except for Russo’s spouse, tax or legal advisor(s), and, in the case of disclosure to any advisor(s), only to the extent necessary to perform services, or except as disclosure of such matters may be required by law.

14.          General .

(a)            Severability . If any provision of this Agreement is found by a court of competent jurisdiction to be unenforceable, in whole or in part, Russo and the Company agree that such provision should be modified so that it is enforceable or, if modification is not possible, that it should be severed and replaced with a legal and enforceable term which most closely represents the intent of Russo and the Company. The enforceability of the remaining provisions will not be affected or impaired by such modification or severance. Russo and the Company agree to perform and execute all such further acts and documents as may be reasonably necessary to carry out the provisions or intent of this Agreement.

(b)            Successors . This Agreement shall be binding upon, enforceable by, and inure to the benefit of Russo and the Company, and Russo’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees, and to any successor or assign of the Company, but neither this Agreement, nor any rights, payments, or obligations arising hereunder may be assigned, pledged or transferred by Russo.

(c)            Controlling Law . Russo agrees that this Agreement shall be governed by the laws of the State of Florida, without the application of conflicts of law provisions thereof.

 

(d)            Waiver . No claim or right arising out of a breach or default under this Agreement can be discharged by a waiver of that claim or right unless the waiver is in writing signed by the party hereto to be bound by such waiver. A waiver by either party hereto of a breach or default by the other party of any provision of this Agreement shall not be deemed a waiver of future compliance therewith and such provision shall remain in full force and effect.

(e)            Notices . All notices, requests, demands and other communications regarding this Agreement shall be in writing and delivered in person or sent by registered or certified mail, postage prepaid, return receipt requested, and properly addressed as follows:

                                                                           

(f)             Counterparts . This Agreement may be executed in two counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

(g)            Headings . All section headings herein are inserted for convenience only and shall not modify or affect the construction or interpretation of any provisions of this Agreement.

15.          Entire Agreement/Amendment . Russo agrees that this Agreement and the Consulting Agreement constitute the entire agreement between Russo and the Company with respect to the subject matter hereof and thereof. Russo acknowledges that this Agreement may not be modified except by written document, signed by Russo and an authorized representative of the Company. Without limiting the generality of the foregoing, Russo reaffirms the restrictive covenants and confidentiality obligations included in the Consulting Agreement and that they shall survive execution of this Agreement.

16.          Knowing and Voluntary Waiver . Russo acknowledges that Russo has been advised in writing to consult an attorney before signing this Agreement. Russo further acknowledges that Russo: (a) has read this Agreement and any Exhibits attached hereto, including the waiver and general release in Paragraph 10; (b) has been given a period of at forty-five (45) days to consider the Agreement; (c) understands its meaning and application; and (d) is signing of Russo’s own free will with the intent of being bound by it. If Russo elects to sign this Agreement prior to the expiration of forty-five (45) days, Russo has done so voluntarily and knowingly.

17.          Revocation of Agreement . Russo further acknowledges that Russo may revoke this Agreement at any time within a period of seven (7) days following the date Russo signs the Agreement. Notice of revocation shall be made in writing addressed to the Company in accordance with Paragraph 14(e) above. Such revocation must be received by the Company by the close of business of the first day following the end of the seven-day revocation period (the “ Effective Date ”). This Agreement shall not become effective until it has been signed and returned by Russo, as provided herein, and the time period for revocation has expired.

 

IN WITNESS WHEREOF, the parties have executed and agreed to this Agreement consisting of 6 pages.

magicJack Vocaltec Ltd

 

By: /s/ Gerald T. Vento		s/ Peter J. Russo
Name:   Gerald T. Vento		Peter J. Russo
Title:     CEO

 

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Exhibit 10.2

 

magicJack Vocaltec, Ltd.

Consulting Agreement

 

This Consulting Agreement (the “ Agreement ”) is made and entered into as of May 11 th , 2013 (the “ Effective Date ”) by and between magicJack Vocaltec Ltd. , a company formed under the laws of the State of Israel, and all of its direct and indirect subsidiaries (collectively, the “ Company ”), and Peter J. Russo , an individual (“ Consultant ”).

 

WITNESSETH:

 

WHEREAS, the Company desires to retain Consultant to perform certain professional consulting services specified herein; and

 

WHEREAS, Consultant represents he has expertise in the services required by the Company and desires to be engaged in the capacity of independent contractor in accordance with the terms and conditions set forth in this Agreement;

 

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

 

1.

Scope of Services

 

a.      Consultant agrees to perform personally the consulting services for the Company specified in Schedule A , which document is incorporated herein by reference.  In addition, Consultant agrees to perform such other duties (together with the consulting services described in Schedule A, the “ Consulting Services ”) which may be requested by the Company from time to time and which are necessary and reasonably related to the successful completion of the services described in Schedule A .

 

b.     During the Term, Consultant will provide up to an average of forty (40) hours of Consulting Services per month to the Company, and Consultant shall maintain sole control and discretion as to when the Consulting Services are performed subject to any deadlines specified by Company.  The Consultant will travel to the Company’s principal office in Florida as requested by the Company, but no more frequently than an average of once per month during the Term. In performing the Consulting Services, the Contractor represents and warrants to Company that Contractor shall (1) use diligent efforts and professional skills and judgment; and (2) perform the Services in accordance with recognized standards of the applicable industry and profession.

 

c.      The Consultant shall communicate with the Company via the telephone or e-mail, regarding the status of the Consulting Services at least weekly and more often as reasonably requested by the Company from time to time.

 

 

d      The Company will not provide Consultant with an office or any other space from which to conduct the Consulting Services.  Consultant shall have the sole control and discretion as to where to perform the Consulting Services.

 

e.      Consultant agrees to supply, at his own expense, any and all tools, equipment or materials necessary for the successful completion of the Consulting Services.

 

f.       Consultant represents and warrants to Company, that (1) Consultant has, and will maintain throughout the term hereof, full right, power, and authority to enter into and perform its obligations under this Agreement without conflict with the rights of or obligations to any other party, or in violation of any applicable law or regulation; and (2) none of the Consulting Services nor any deliverables provided to Company shall contain any confidential information of any third party.

 

2.

Consideration

 

a.      In consideration of the Consulting Services performed by Consultant, the Company agrees to pay Consultant a fee of Sixteen Thousand Six Hundred Sixty-six and 66/100  Dollars ($16,666.66) per month spent providing the Consulting Services (pro-rated for any partial month). Consultant shall invoice Company monthly for such fee and the Company shall provide payment within ten (10) business days following receipt of such invoices.

 

b.     The Company agrees to reimburse Consultant for the actual costs and expenses incurred at the Company’s request in the performance of the Consulting Services, including travel and related expenses (transportation, accommodations and meals) so long as such costs and expenses are approved in advance by the Company’s Chief Financial Officer, and are adequately and appropriately documented.  Consultant shall record such approved expenses on the invoice described in paragraph (a) above.  Consultant shall be responsible for all other costs and expenses.

 

c.      The Company shall have no obligation to make any payment to Consultant under the terms of this Agreement other than those specifically set forth in this Section 2 .

 

3.

Term

 

The Consultant shall commence providing services on May 11, 2013 and shall continue until May 10, 2014 (the “ Term ”).  However, Company may terminate this Agreement, with or without cause, at any time effective upon written notice to Consultant. Consultant may terminate this Agreement for breach of the terms and conditions hereof by Company provided that Consultant provides written notice of such breach to the Company and Company fails to cure within ten (10) days after the date of receipt of such notice.  Upon termination of this Agreement for any reason, the Company’s sole obligation to Consultant will be payment of the fees set forth in Section 2.a. hereof for Consulting Services performed through the termination date, plus unreimbursed expenses incurred by Consultant in accordance with Section 2.b. hereof.

 

 

4.

Independent Consultant Status

 

a.      It is understood and agreed that Consultant will act solely as an independent contractor hereunder and shall conduct his operations as an independent contractor, and nothing in this Agreement shall be construed to render Consultant an employee of the Company.  The Company shall have no right to control or direct the details, manner or means by which Consultant accomplishes the results of the Consulting Services.

 

b.      Consultant understands and recognizes that it is not an agent of the Company and has no authority to and shall not bind, represent or speak for the Company for any purpose whatsoever.

 

c.      The Company will record payments to Consultant on, and provide to Consultant, an Internal Revenue Service Form 1099, and the Company will not withhold any federal, state or local employment taxes on Consultant's behalf.  Consultant agrees to pay all such taxes in a timely manner and as prescribed by law.

 

d.      Consultant will not be considered an employee for purposes of any Company employment policy or any employment benefit plan, and Consultant will not be entitled to any benefits under any such policy or benefit plan.

 

e.      During the Term, Consultant shall comply with Company’s Reg. FD/Media policy and Insider Trading Policy (copies of which have been provided to Consultant and Consultant acknowledges receipt thereof).

 

5.

Intellectual Property Rights

 

All materials, data, reports, methods, and formulae developed, written, or created in the performance of the Consulting Services for Company by Consultant (“ Company Developments ”) whether such Consulting Services were performed prior to or during the Term of this Agreement will be the sole and exclusive property of Company.  All copyrightable materials prepared by Consultant for Company will be considered “works made for hire” under the copyright laws of the United States and will be owned exclusively by Company.  Consultant hereby assigns to Company all of his right, title, and interest in and to all Company Developments, together with any proprietary right related thereto, including but not limited to, any patent, copyright, trade secret, or other intellectual property rights.

 

6.

Certain Restrictive Covenants .  Consultant hereby agrees to be bound by the non-compete, non-solicitation and confidentiality provisions set forth below.

 

a.      Consultant agrees that during the Restricted Period (as defined below), Consultant will not engage or participate, directly or indirectly, as principal, agent, executive, director, proprietor, joint venturer, trustee, employee, employer, consultant, partner or in any other capacity whatsoever, in the conduct or management of, or own any stock or any other equity investment in or debt of, or provide any services of any nature whatsoever to any business that is competitive with any business conducted by the Company as of the date of termination of the Consulting Agreement or within twelve (12) months prior to such date of termination, provided that nothing herein shall prevent Consultant from making passive investments in up to 2% of the common stock of any publicly traded entity.

 

 

b.     The term “ Restricted Period ” means a period beginning on the Effective Date and ending on the date that is one (1) year after the termination date of this Agreement.

 

c.      During the Restricted Period, Consultant will not, for his own benefit or for the benefit of any person other than the Company, (i) solicit, or assist any person to solicit, any officer, director, executive or employee of or consultant to the Company to leave his or her employment with or terminate his or her engagement by the Company, (ii) hire or cause to be hired any person who is then, or who at any time within the preceding twelve (12) months was, an officer, a director, an executive or an employee of or consultant to the Company or (iii) engage any person who is then or who at any time within the preceding twelve (12) months was, an officer, director, executive or employee of or consultant to the Company as a partner, contractor, sub-contractor or consultant or in any other capacity whatsoever.

 

d.      Consultant shall not (for his own benefit or the benefit of any person other than the Company) use or disclose any information with respect to the Company or any vendor, customer or client of the Company (collectively, “ Confidential Information ”).  “Confidential Information” includes, by way of example, matters of a business nature, such as proprietary information about costs, profits, markets, sales, lists of customers, and other information of a similar nature and matters of a technical nature, “know-how,” computer programs (including documentation of such programs) and research projects, in each case, to the extent not available to the public and to the extent not independently generated by Consultant or others without any reference to the Confidential Information of the Company or any vendor, customer or client of the Company, and such materials constituting plans for future development.  Notwithstanding the foregoing, Consultant may disclose Confidential Information (i) if compelled to disclose the same by judicial or administrative process or by other requirements of law or regulation (but subject to the following provisions of this Section 6.d ), (ii) if the same hereafter is in the public domain through no fault of Consultant, (iii) if the same is later acquired by Consultant from another source that is not under an obligation to another person to keep such information confidential or (iv) if the same was independently developed by Consultant without use of, or reference to, any of the information furnished by or on behalf of the Company, provided that such independent development can reasonably be proven by written records.  If Consultant is requested or required (by oral questions, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any such information, Consultant shall provide the Company with prompt written notice of any such request or requirement so that the Company may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 6.d. .  If, in the absence of a protective order or other remedy or the receipt of a waiver by the Company, you nonetheless, based on the written advice of outside counsel, are required to disclose such information to any tribunal or in accordance with applicable law or regulation, Consultant, without liability hereunder, may disclose that portion of such information which such counsel advises that Consultant is legally required to disclose.  At any time upon the request of the Company, Consultant (or his heirs or personal representatives) shall deliver to the Company all documents and materials containing Confidential Information and all documents, materials and other property belonging to the Company, which in either case are in the possession or under the control of Consultant (or his heirs or personal representatives).

 

 

7.

Continuing Obligations

 

The Consultants acknowledges and agrees that the covenants and obligations set forth in Sections 5, 6, 9 and 11 of this Agreement are continuing in nature and shall survive: (i) any termination of the Consulting Services under this Agreement (regardless of the reasons therefor), including, without limitation, termination at the Company’s initiative; (ii) any change in Consultant’s status or the terms of Consultant’s engagement with the Company; and (iii) any interruption in the services provided under this Agreement during which Consultant’s services are suspended and restarted.

 

8.

Other Work By Consultant

 

The Consultant shall be free to provide professional consulting services, employment services or service as a member of an entity’s Board of Directors or similar governing body to entities or individuals other than the Company so long as Consultant meets his minimum monthly service obligations to the Company as described in paragraph 1(b) above and otherwise complies with the terms and conditions of this Agreement.  Consultant will provide to the Company prior written notice of its intention to render any such services to any entity or individual which competes with the Company.

 

9.

No Conflicting Agreements

 

The Consultant hereby represents and warrants that Consultant has no commitments or obligations inconsistent with this Agreement.  The Consultant hereby agrees to indemnify and hold the Company harmless against any loss, damage, liability or expense arising from any claim based upon circumstances alleged to be inconsistent with such representation and warranty.    During the period during which Consultant’s services are engaged by the Company, Consultant will not enter into any Agreement (oral or written), which may be in conflict with this Agreement.

 

10.

Transfer and Assignment

 

This Agreement may not be assigned or transferred by Consultant.  Should such an assignment or transfer occur, this Agreement shall become null and void at the discretion of the Company upon written notice by the Company to Consultant.  The Company may assign or transfer this Agreement at its discretion upon written notice to Consultant.

 

11.

Return of Property

 

Upon the Company’s request, Consultant shall, within five (5) calendar days of the date this Agreement terminates and regardless of the reason for the termination, return to the Company all Company property in Consultant’s possession or under Consultant’s control, in any form, including, but not limited to, products, materials, memoranda, notes, notebooks, records, reports, documents, computer hardware, software, and Confidential Information (regardless of how it is maintained) and any copies thereof.

 

 

12.

Remedies for Breach

 

Consultant acknowledges that the restrictions contained in this agreement are reasonable and necessary to protect the legitimate interests of the Company, and are not unduly burdensome to Consultant.  Without limiting the Company’s rights to pursue any other legal and equitable remedies available to it for any breach or threatened breach (including the recovery or damages) by Consultant of the covenants, agreements and warranties contained herein, Consultant acknowledges that a breach of said covenants, agreements and warranties would cause a loss to the Company that could not reasonably or adequately be compensated in damages in any action at law, that remedies other than injunctive relief could not fully compensate the Company for a breach of said covenants, agreements and warranties and that accordingly, the Company shall be entitled to injunctive relief to prevent any breach or continuing or threatened breaches of Consultant’s covenants, agreements and warranties as set forth herein.

 

It is the intention of the parties hereto that if, in any action before any Court empowered to enforce this Agreement, any term, restriction, covenant, agreement or promise is found to be unenforceable, then such term, restriction, covenant, agreement or promise shall be deemed modified to the extent necessary to make it enforceable by such Court.

 

13.

Waiver

 

Waiver by the Company of a breach of any provision of this Agreement or failure to enforce any such provision shall not operate or be construed as a waiver of any subsequent breach of any such provision or of the Company's right to enforce any such provision.  No act or omission of the Company shall constitute a waiver of any of its rights hereunder except for a written waiver signed by the Company's President.

 

14.

Governing Law and Jury Waiver

 

This Agreement shall be deemed to have been made in the State of Florida, shall take effect as an instrument under seal within the State of Florida, and the validity, interpretation and performance of this Agreement shall be governed by, and construed in accordance with, the internal law of the State of Florida, without giving effect to conflict of law principles.  Both parties further acknowledge that the last act necessary to render this Agreement enforceable is its execution by the Company in the State of Florida, and that the Agreement thereafter shall be maintained in the State of Florida.  Both parties agree that any action, demand, claim or counterclaim relating to the terms and provisions of this Agreement, or to its breach, shall be commenced in the State of Florida in a court of competent jurisdiction.  Both parties further acknowledge that venue shall exclusively lie in the State of Florida and that material witnesses and documents would be located in the State of Florida.

BOTH PARTIES FURTHER AGREE THAT ANY SUCH ACTION, DEMAND, CLAIM OR COUNTERCLAIM SHALL BE RESOLVED BY A JUDGE ALONE, AND BOTH PARTIES HEREBY WAIVE AND FOREVER RENOUNCE THE RIGHT TO A TRIAL BEFORE A CIVIL JURY.

 

 

15.

Counterparts

 

This Agreement may be executed in two counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

16.

Headings

 

All section headings herein are inserted for convenience only and shall not modify or affect the construction or interpretation of any provisions of this Agreement.

 

17.

Notices

 

All notices, requests, consents and other communications hereunder shall be in writing, shall be addressed to the receiving party's address set forth below or to another address as a party may designate by notice hereunder, and shall be either (i) delivered by hand, (ii) made by telex, telecopy or facsimile transmission, (iii) sent by overnight courier or (iv) sent by registered or certified mail, return receipt requested, postage prepaid.

 

 

If any portion or provision of this Agreement shall to any extent be declared unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby and each portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law.

 

19.

Entire Agreement; Modifications

 

This Agreement constitutes the entire agreement of the parties hereto, and all previous communications between the parties, whether written or oral with reference to the subject matter of this Agreement, are hereby canceled and superseded.  No modification of this contract shall be binding upon the parties hereto, unless such is in writing and duly signed by the respective parties hereto.  This Agreement shall take effect when signed by both parties.

20.       Indemnification and Release Undertaking .  The terms of the Indemnification and Release Undertaking executed by YMAX Corporation and Vocaltec Communications Ltd. in favor of Consultant dated January 5, 2011 will remain in full force and effect during the Term of this Agreement.

 

 

IN WITNESS WHEREOF, the respective parties have caused this Agreement to be executed as of the date first above written.

 

magicJack Vocaltec Ltd

 

 

SCHEDULE A

 

Description of Consulting Services

 

Transition services and advice with respect to the Company’s financial reporting and related matters.

 

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Exhibit 10.3

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered as of May 8 th , 2013 (“Effective Date”) by and between MagicJack VocalTec Ltd. (the “Company”) and Jose Gordo (the “Executive” and, together with the Company, the “Parties”).

 

WHEREAS , the Company desires for the Executive to be employed as Chief Financial Officer (“CFO”) of the Company as of May 10 th , 2013, and Executive desires to accept employment, subject to and on the terms and conditions set forth in this Agreement; and

 

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”), approved by the Board, and determined by the Compensation Committee and the Board to be consistent with the principles of Amendment 20 to the Israeli 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 CFO of the Company effective as of May 10 th , 2013, and the Executive hereby agrees to be employed in such capacity. The Executive will perform all duties and responsibilities inherent in the positions of CFO. The Executive shall report directly to the Company’s Chief Executive Officer. He shall have all authority and responsibility commensurate with the CFO title.

 

2.	TERM OF AGREEMENT AND EMPLOYMENT .  The term of the Executive’s employment under this Agreement will begin on the date hereof and terminate on December 31, 2015.

 

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 Target Annual Bonus (as defined below); 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 (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; (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.

 

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 $325,000, 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”).

 

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 be $150,000, subject to review each calendar year and possible increase in the sole discretion of the Board (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 each fiscal year 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 by the Compensation Committee and communicated to Executive no later than ninety (90) days after the start of each fiscal year.  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.

 

Executive’s Annual Bonus for calendar year 2013 shall be calculated and paid as though Executive commenced employment as of January 1 st , 2013, and each Annual Bonus thereafter shall be paid on the basis of the Company’s fiscal year, which is the calendar year.

 

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 2 nd anniversary of the Annual Bonus payment in question.

 

C.

SIGNING BONUS .  Executive shall receive a signing bonus in the amount of $325,000 within three (3) days after full execution 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 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.

 

6.

EQUITY GRANT . Executive shall be granted stock options to purchase 256,151 shares of the Company’s ordinary shares at an exercise price equal to the fair market value of the Company’s ordinary shares on the date of grant, which will be the date of this Agreement (the “Options”).   In addition, Executive shall be granted 27,634 shares of restricted ordinary shares (the “Restricted Stock”) effective as of the date of this Agreement upon approval of the magicJack Vocaltec 2013 Long-Term Incentive Plan by the Company’s stockholders. 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 sum of (a) Executive’s Annual Base Salary at the time of such termination and (b) the Executive’s Target Annual Bonus for the fiscal year in which his employment is terminated (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). 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), which amounts shall be paid to the Executive 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(B).

 

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 6 months subsequent to a Change of 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 three (3) times the sum of (a) Executive’s Annual Base Salary at the time of such termination and (b) the Executive’s Target Annual Bonus for the fiscal year in which his employment is terminated (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). 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 180 days prior to the Company's execution of an agreement which, if consummated, would constitute a Change of Control, then upon consummation of such 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.

 

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.  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.

 

 

8.	RESTRICTIVE COVENANTS .

 

A.

GENERAL .  The Company and the Executive hereby acknowledge and agree that (i) the Executive is in possession of trade secrets of the Company (the “Trade Secrets”), (ii) the restrictive covenants contained in this Section 8 are justified by legitimate business interests of the Company, including, but not limited to, the protection of the Trade Secrets, and (iii) the restrictive covenants contained in this Section 8 are reasonably necessary to protect such legitimate business interests of the Company.

 

B.

NON-COMPETITION .  In consideration for the termination payments and benefits that the Executive may receive in accordance with Section 7 of this Agreement, the Executive agrees that during the period of the Executive’s employment with the Company and until two (2) years after the termination of the Executive’s employment with the Company, the Executive will not, directly or indirectly, either (i) on the Executive’s own behalf or as a partner, officer, director, trustee, executive, agent, consultant or member of any person, firm or corporation, or otherwise, enter into the employ of, render any service to, or engage in any business or activity which is the same as or competitive with any business or activity conducted by the Company or any of its majority-owned subsidiaries, or (ii) become an officer, employee or consultant of, or otherwise assume a substantial role or relationship with, any governmental entity, agency or political subdivision that is a client or customer of the Company or any subsidiary or affiliate of the Company; provided, however, that the foregoing shall not be deemed to prevent the Executive from investing in securities of any company having a class of securities which is publicly traded, so long as through such investment holdings in the aggregate, the Executive is not deemed to be the beneficial owner of more than five percent (5%) of the class of securities that is so publicly traded.  During the period of the Executive’s employment and until three years after the termination of the Executive’s employment, the Executive will not, without the Company’s prior written consent, directly or indirectly, on the Executive’s own behalf or as a partner, shareholder, officer, executive, director, trustee, agent, consultant or member of any person, firm or corporation or otherwise, seek to employ or otherwise seek the services of any employee or consultant of the Company or any of its majority-owned subsidiaries.

 

C.

CONFIDENTIALITY .  During and following the period of the Executive’s employment with the Company, the Executive will not use for the Executive’s own benefit or for the benefit of others, or divulge to others, any information, Trade Secrets, knowledge or data of a secret or confidential nature and otherwise not available to members of the general public that concerns the business or affairs of the Company or its subsidiaries or affiliates and which was acquired by the Executive at any time prior to or during the term of the Executive’s employment with the Company (collectively the “Data”), except with the specific prior written consent of the Company.

 

 

D.

WORK PRODUCT .  The Executive agrees that all programs, inventions, innovations, improvements, developments, methods, designs, analyses, reports and all similar or related information which relate to the business of the Company and its subsidiaries or affiliates, actual or anticipated, or to any actual or anticipated research and development conducted in connection with the business of the Company and its subsidiaries or affiliates, and all existing or future products or services, which are conceived, developed or made by the Executive (alone or with others) during the term of this Agreement (“Work Product”) belong to the Company.  The Executive will cooperate fully in the establishment and maintenance of all rights of the Company and its subsidiaries or affiliates in such Work Product. The provisions of this Section 8(D) will survive termination of this Agreement indefinitely to the extent necessary to require actions to be taken by the Executive after the termination of the Agreement with respect to Work Product created during the term of this Agreement.

 

E.

ENFORCEMENT .  The Parties agree and acknowledge that the restrictions contained in this Section 8 are reasonable in scope and duration and are necessary to protect the Company or any of its subsidiaries or affiliates. If any covenant or agreement contained in this Section 8 is found by a court having jurisdiction to be unreasonable in duration, geographical scope or character of restriction, the covenant or agreement will not be rendered unenforceable thereby but rather the duration, geographical scope or character of restriction of such covenant or agreement will be reduced or modified with retroactive effect to make such covenant or agreement reasonable, and such covenant or agreement will be enforced as so modified.  The Executive agrees and acknowledges that the breach of this Section 8 will cause irreparable injury to the Company or any of its subsidiaries or affiliates and upon the breach of any provision of this Section 8, the Company or any of its subsidiaries or affiliates shall be entitled to injunctive relief, specific performance or other equitable relief, without being required to post a bond; PROVIDED, HOWEVER, that, this shall in no way limit any other remedies which the Company or any of its subsidiaries or affiliates may have (including, without limitation, the right to seek monetary damages).  In the event of any conflict between the provisions of this Section 8 and Section 7 of the Agreement, the provisions of this Section 8 shall prevail.

 

9.

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.

 

 

10.	INTENTIONALLY OMITTED .

 

11.

ASSIGNMENT .  The Executive may not assign, transfer, convey, mortgage, hypothecate, pledge or in any way encumber the compensation or other benefits payable to the Executive or any rights which the Executive may have under this Agreement. 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. This Agreement will inure to the benefit of and will be binding upon any successor to the Company, and any successor to the Company shall be authorized to enforce the terms and conditions of this Agreement, including the terms and conditions of the restrictive covenants contained in Section 8 hereof. 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. This Agreement may not otherwise be assigned by the Company.

 

12.	GOVERNING LAW .  This Agreement shall be governed by the laws of the State of Florida without regard to the application of conflicts of laws.

 

13.

ENTIRE AGREEMENT .  This Agreement constitutes the only agreements between Company and the Executive regarding the Executive’s employment by the Company. This Agreement supersedes 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.

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.

 

15.

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 Chairman of the Board of Directors at 5701 Georgia Avenue, West Palm Beach, Florida 33405. 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.

 

 

16.	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.

 

17.	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.

 

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]

 

 

IN WITNESS WHEREOF , the Parties hereto have executed and delivered this Agreement under seal as of the date first above written.

 

MAGICJACK VOCALTEC LTD.

 

Signature:       /s/ Gerald T. Vento

 

Name:             Gerald T. Vento

 

Title:               President and Chief Executive Officer

 

EXECUTIVE

 

Signature:        /s/ Jose Gordo

 

Name:              Jose Gordo

 

 

Exhibit 10.5

 

OPTION NUMBER: