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TheStreet Open House

MagicJack Announces Repurchase Of $13 Million In Stock And Founder's Exit From Operations

Stocks in this article: CALL

WEST PALM BEACH, Fla. and JERUSALEM, Nov. 12, 2013 (GLOBE NEWSWIRE) -- magicJack VocalTec, Ltd. (Nasdaq:CALL), a leading cloud communications company, announced that it has repurchased in privately negotiated transactions 1,062,092 of the Company's ordinary shares at $12.24 per share, for an aggregate purchase price of approximately $13 million. The shares were purchased pursuant to agreements entered into with the independent trustees of two irrevocable trusts previously created by the Company's founder, Daniel M. Borislow.  

The Company has also entered into an agreement with Mr. Borislow which provides that Mr. Borislow will not have any ongoing involvement in the business or operations of the Company or any of its subsidiaries. The agreement contains a standstill provision under which Mr. Borislow agrees, for a period of two years, to refrain from taking certain actions as a shareholder of the Company. Except as limited by this provision, Mr. Borislow may still exercise his shareholder rights. Mr. Borislow has also agreed not to compete with the Company or to solicit its employees without the Company's consent during the next two years. Mr. Borislow has also agreed to the assignment of certain intellectual property rights for the benefit of the Company. The Company will issue 300,000 of its ordinary shares to Mr. Borislow in exchange for his obligations under this agreement. 

The Company has also executed a Letter of Intent committing to negotiate an agreement to outsource to a customer care company affiliated with Mr. Borislow certain live chat customer care activities currently provided to the Company primarily by a third party. The Company has allowed Mr. Borislow to solicit six current Company employees to assist with the operation of the customer care company. If the customer care agreement is executed, the customer care services performed under such agreement will constitute an express and limited exception to the limit on Mr. Borislow's activities on behalf of the Company described above. The Letter of Intent provides for the Company to pay a $1.5 million break-up fee to the customer care company if an agreement on the terms of such customer care activities is not reached by December 20, 2013.

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