EXHIBIT 10.1
OPTION AGREEMENT WITH TANG ▇▇▇ ▇▇▇▇▇
THIS OPTION AGREEMENT ("Agreement") is entered into effective the 11th day of
April 2002, by and between Tang ▇▇▇ ▇▇▇▇▇, an individual ("▇▇▇▇▇"), and Elephant
Talk Communications, Inc., a California corporation (the "Company").
WHEREAS, the Company proposes to issue to ▇▇▇▇▇ options to purchase shares of
its common stock (the "Common Stock") in connection with the Company's
engagement of ▇▇▇▇▇ pursuant to the Advisory Agreement of even date between the
Company and ▇▇▇▇▇, incorporated by reference herein (the "Advisory Agreement");
and
WHEREAS, to induce ▇▇▇▇▇ to execute the First Amendment to the Advisory
Agreement the Company hereby grants ▇▇▇▇▇ an option to purchase shares of the
Company's Common Stock subject to the terms and conditions set forth below.
NOW, THEREFORE, for and in consideration of the mutual promises herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and subject to the terms and conditions set forth below,
▇▇▇▇▇ and the Company agree as follows:
1. The Option
The Company hereby grants ▇▇▇▇▇ (hereinafter "Holder") an option (the "Option")
to acquire Two Million (2,000,000) shares of the Company's Common Stock, subject
to adjustment as set forth herein (such shares, as adjusted, are hereinafter
referred to as the "Option Shares"), at the closing market price of Thursday,
April 11th, 2002 which is Thirty Two Cents ($0.32) per share ("Option Price").
2. Term and Exercise of Option
A. Term of Option. Subject to the terms of this Agreement, Holder shall
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have the right to exercise the Option in whole or in part, commencing the date
hereof through the close of business on April 10, 2003.
B. Exercise of the Option. The Option may be exercised upon written
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notice to the Company at its principal office setting out the number of Option
Shares to be purchased, together with payment of the Option Price.
C. Issuance of Option Shares. Upon such notice of exercise and payment
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of the Option Price, the Company shall issue and cause to be delivered within
five (5) business days following the written order of Holder, or its successor
as provided for herein, and in such name or names as the Holder may designate, a
certificate or certificates for the number of Option Shares to be purchased. The
rights of purchase represented by the Option shall be exercisable, at the
election of the Holder thereof, either in full or from time to time in part, and
in the event the Option is exercised in respect of less than all of the Option
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Shares purchasable on such exercise at any time prior to the date of expiration
hereof, the remaining Option Shares shall continue to be subject to adjustment
as set forth in paragraph 4 hereof. The Company irrevocably agrees to
reconstitute the Option Shares as provided herein.
3. Reservation of Option Shares
The Company shall at all times keep reserved and available, out of its
authorized Common stock, such number of shares of Common Stock as shall be
sufficient to provide for the exercise of the rights represented by this
Agreement. The transfer agent for the Common Stock and any successor transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of any of such rights of purchase, will be irrevocably authorized and directed
at all times to reserve such number of shares as shall be requisite for such
purpose. The Company will cause a copy of this Agreement to be kept on file with
the transfer agent or its successors.
4. Adjustment of Option Shares
The number of Option Shares purchasable pursuant to this Agreement shall be
subject to adjustment from time to time upon the happening of certain events, as
follows:
A. Adjustment for Recapitalization. Subject to paragraph 4.B below, in the
event the Company shall (a) sub-divide its outstanding shares of Common Stock,
or (b) issue or convert by a reclassification or recapitalization of its shares
of Common Stock into, for, or with other securities (a "Recapitalization"), the
number of Option Shares purchasable hereunder immediately following such
Recapitalization shall be adjusted so that the Holder shall be entitled to
receive the kind and number of Option Shares or other securities of the Company
measured as a percentage of the total issued and outstanding shares of the
Company's Common Stock as of the hereof which it would have entitled to receive
immediately preceding such Recapitalization, had such Option been exercised
immediately prior to the happening of such event or any record date with respect
thereto. An adjustment made pursuant to this paragraph shall be calculated and
effected taking into account the formula set forth in paragraph 4.B. below and
shall become effective immediately after the effective date of such event
retroactive to the effective date.
B. Adjustment of the Exercise Price and Number of Option Shares. In the
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event of any change in the Company's Common Stock by reason of a reverse stock
split, neither the number nor the Option Price of the shares subject to this
Option shall be changed or be adjusted.
C. Preservation of Purchase Rights Under Consolidation. Subject to paragraph 4.B
above, in case of any Recapitalization or any other consolidation of the Company
with or merger of the Company into another corporation, or in case of any sale
or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company shall prior to the closing
of such transaction, cause such successor or purchasing corporation, as the case
may be, to acknowledge and accept responsibility for the Company's obligations
hereunder and to grant the Holder the right thereafter upon payment of the
Option Price to purchase the kind and amount of shares and other securities and
property which he would have owned or have been entitled to receive after the
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happening of such consolidation, merger, sale or conveyance. The provisions of
this paragraph shall similarly apply to successive consolidations, mergers,
sales or conveyances. D. Notice of Adjustment. Whenever the number of Option
Shares purchasable hereunder is Adjusted, as herein provided, the Company shall
mail by first class mail, postage prepaid, to the Holder notice of such
adjustment or adjustments, and shall deliver to Holder setting forth the
adjusted number of Option Shares purchasable and a brief statement of the facts
requiring such adjustment, including the computation by which such adjustments
was made.
5. Failure to Deliver Option Shares Constitutes Breach Under Advisory
Agreement
Failure by the Company, for any reason, to deliver the certificates representing
any shares purchased pursuant to this Option within the five (5) business day
period set forth in paragraph 2 above, or the placement of a Stop Transfer order
by the Company on any Option Shares once issued, shall constitute a "Breach"
under the Advisory Agreement and, for the purpose of determining the terms of
this Agreement, shall automatically toll the expiration of this Agreement for a
period of time equal to the delay in delivering the subject shares or term of
the Stop Transfer order.
6. Assignment
The Option represented by this Agreement may only be assigned or transferred by
▇▇▇▇▇ to an affiliate or subsidiary, or as the result of a corporate
reorganization or recapitalization. For the purpose of this Option the term
"Affiliate" shall be defined as a person or enterprise that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with the Company otherwise, this Agreement and the
rights hereunder shall not be assigned by either party hereto.
7. Counterparts
A facsimile, telecopy or other reproduction of this instrument may be executed
by one or more parties hereto and such executed copy may be delivered by
facsimile or similar instantaneous electronic transmission device pursuant to
which the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and effective for all.
8. Further Documentation
Each party hereto agrees to execute such additional instruments and take such
action as may be reasonably requested by the other party to effect the
transaction, or otherwise to carry out the intent and purposes of this
Agreement.
9. Notices
All notices and other communications hereunder shall be in writing and shall be
sent by prepaid first class mail to the parties at the following addresses, as
amended by the parties with written notice to the other:
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To Company: Elephant Talk Communications, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
To ▇▇▇▇▇: Tang ▇▇▇ ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇ ▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇
With copy to: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
10. Counterparts
This Agreement may be executed simultaneously in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
11. Governing Law
This Agreement was negotiated, and shall be governed by the laws of California
notwithstanding any conflict-of-law provision to the contrary.
12. Entire Agreement
This Agreement sets forth the entire understanding between the parties hereto
and no other prior written or oral statement or agreement shall be recognized or
enforced.
Severability
If a court of competent jurisdiction determines that any clause or provision of
this Agreement is invalid, illegal or unenforceable, the other clauses and
provisions of the Agreement shall remain in full force and effect and the
clauses and provisions which are determined to be void, illegal or unenforceable
shall be limited so that they shall remain in effect to the extent permissible
by law.
Amendment or Waiver
Every right and remedy provided herein shall be cumulative with every other
right and remedy, whether conferred herein, at law, or in equity, and may be
enforced concurrently herewith, and no waiver by any party of the performance of
any obligation by the other shall be construed as a waiver of the same or any
other default then, theretofore, or thereafter occurring or existing. At any
time prior to Closing, this Agreement may be amended by a writing signed by all
parties hereto.
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Headings
The section and subsection headings in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and year
first written above.
"▇▇▇▇▇"
▇▇▇▇ ▇▇▇ ▇▇▇▇▇, an individual
/s/ Tang ▇▇▇ ▇▇▇▇▇
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Tang ▇▇▇ ▇▇▇▇▇
The "Company"
Elephant Talk Communications,, Inc.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇
Title: President & CEO
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