Document:

Exhibit 10.2

 

THIS NOTE AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER
THIS NOTE, SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND
SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR
THE COMPANY, IS AVAILABLE.

 

ELEPHANT TALK COMMUNICATIONS CORP

 

9% UNSECURED SUBORDINATED CONVERTIBLE
PROMISSORY NOTE

 

	Principal: US $30,000	Issuance Date: December 18, 2015

 

FOR VALUE RECEIVED, Elephant Talk
Communications Corp, a Delaware Company (the “Company”), promises to pay to [                                          ] (hereafter, together with any subsequent holder hereof, called “Holder”), the “Principal”
noted above (the “Principal”), payable on December 18, 2018 (the “Maturity Date”). This
convertible note is a duly authorized issue of the Issuer, purchased by the initial Holder in the Issuer’s 2015 private
unit offering pursuant to certain Private Placement Memorandum dated December 2, 2015 (the “Memorandum”) and
designated as its “2015 Convertible Note” (referred to herein as the “Note”). This Note is issued
as part of a “Unit”, each Unit is comprised of one Note in the principal amount of $30,000 and one five-year warrant
(“Warrant”) to purchase one hundred thousand (100,000) shares of Common Stock, at a Unit Price of $30,000.
Capitalized terms used herein but not defined herein shall have the meaning ascribed to it in the Memorandum.

 

The following is a
statement of the rights of the Holder of this Note and the terms and conditions to which this Note is subject, and to which the
Holder, by acceptance of this Note, agrees:

 

1.          Principal
Repayment. The outstanding Principal of this Note shall be payable on the Maturity Date, unless this Note has been earlier
converted as described below.

 

2.          Interest.
Interest (the “Interest”) shall accrue on the unpaid Principal of this Note from the date hereof until such
Principal is repaid in full at the rate of nine percent (9%) per annum, payable on each anniversary of the Issuance Date. All computations
of the interest rate hereunder shall be made on the basis of a 360-day year of twelve 30-day months. In the event that any interest
rate provided for herein shall be determined to be unlawful, such interest rate shall be computed at the highest rate permitted
by applicable law. All accrued but unpaid Interest shall be paid to the Holder upon: (a) the Automatic Conversion, (b) a Voluntary
Conversion and (c) the Maturity Date according to the terms hereof. Any payment by the Company of any interest amount in excess
of that permitted by law shall be considered a mistake, with the excess being applied to the Principal of this Note without prepayment
premium or penalty.

 

    	 	1	 

     

    

 

3.          Ranking.
The obligations of the Company under this Note shall rank junior with respect to the indebtedness outstanding under that certain
Credit Agreement, dated as of November 17, 2014, by and among Elephant Talk Europe Holding B.V., as the Borrower, the Company,
as the Parent and Guarantor, the other Subsidiaries of the Parent, from time to time party hereto as Guarantors, the Lenders from
time to time party hereto and Atalaya Administrative LLC, as Administrative Agent and Collateral Agent, as amended from time to
time (the “Atalaya Credit Agreement”) and that certain note in the principal amount of $ 2 million issued to
Cross River; provided further, however, that this Note shall rank pari passu with respect to all other Notes issued pursuant
to the Memorandum and senior to all other indebtedness of the Company.

 

4.          Conversion.

 

(a)          Mandatory
Conversion. In the event the closing price of the Company’s common stock (“Common Stock”), par value $0.0001,
exceeds $1.00 (subject to adjustment after the Issuance Date for any events set forth in 4(d)(i) below) for ninety (90) consecutive
calendar days prior to the Maturity Date, the Principal of this Note then outstanding (excluding all accrued but unpaid interest
thereon) shall automatically convert (the “Mandatory Conversion”) into shares of common stock of the
Company at a conversion price of $0.30, subject to further adjustment for the events referred to in Section 4(d) (the “Conversion
Price”). The Mandatory Conversion shall be effected upon the date which is ten trading days after the ninety consecutive
trading day referenced above (the “Mandatory Conversion Date”). The Company shall provide the Holder with written
notice of the Mandatory Conversion Date at least ten trading days prior to such date and the Holder shall be permitted to make
a voluntary conversion pursuant to Section 4(b) during such period.

 

(b)          Voluntary
Conversion. Each holder of the Notes shall have the right, exercisable at any time prior to the Maturity Date, to convert the principal
amount then outstanding into shares of Common Stock, at the Conversion Price. In addition, upon a voluntary conversion prior to
the Maturity Date 50% of the interest that would have been payable between the date of the voluntary conversion and the Maturity
Date (the “Unpaid Interest Amount”) shall be converted into (i) such number of shares of Common Stock equal to the
50% of Unpaid Interest Amount at the Conversion Price (the “Unpaid Interest Shares”) and (ii) warrants to purchase
such number of shares of Common Stock equal to 100% of the Unpaid Interest Shares with an exercise price of $.45 per share (the
“Unpaid Interest Warrants”).

 

(c)          Mechanics
of Conversion. The Company shall give notice to the Holder of the Mandatory Conversion. Upon the Mandatory Conversion Date,
this Note shall automatically become a right to receive the shares of Common Stock. The Company shall prepare and deliver irrevocable
instructions addressed to the Company’s transfer agent to issue such required number of securities upon the Mandatory Conversion,
which securities shall be delivered to the Holder within five (5) trading days of the Mandatory Conversion Date. In connection
with a Voluntary Conversion, the Holder shall deliver a completed and executed Notice of Conversion attached hereto as Exhibit
I and surrender and deliver this Note, duly endorsed, to the Company’s office or such other address which the Company shall
designate against delivery of the certificates presenting the new securities of the Company. The Company shall prepare and deliver
irrevocable instructions addressed to the Company’s transfer agent to issue such required number of securities as set forth
in the Conversion Notice, which securities shall be delivered to the Holder within five (5) trading days of the delivery of the
Conversion Notice.

 

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(d)          Adjustments
to Conversion Price.

 

(i)          Adjustments
for Stock Splits and Combinations and Stock Dividends. If the Company shall at any time or from time to time after the
date hereof, effect a stock split or combination of the outstanding Common Stock or pay a stock dividend in shares of Common Stock,
then the Conversion Price shall be proportionately adjusted. Any adjustments under this Section 4(d)(i) shall be effective at the
close of business on the date the stock split or combination becomes effective or the date of payment of the stock dividend, as
applicable.

 

(ii)                  Merger
Sale, Reclassification, Etc. In case of any (A) consolidation or merger (including a merger in which the Company is
the surviving entity), (B) sale or other disposition of all or substantially all of the Company’s assets or distribution
of property to shareholders (other than distributions payable out of earnings or retained earnings), or reclassification, change
or conversion of the outstanding securities of the Company or of any reorganization of the Company (or any other Company the stock
or securities of which are at the time receivable upon the conversion of this Note) or any similar corporate reorganization on
or after the date hereof, then and in each such case the Holder of this Note, upon the conversion hereof at any time thereafter
shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the conversion hereof prior
to such consolidation, merger, sale or other disposition, reclassification, change, conversion or reorganization, the stock or
other securities or property to which such Holder would have been entitled upon such consummation if such Holder had converted
this Note on a voluntary basis pursuant to Section 4(b) immediately prior thereto.

 

(iii)        Subsequent
Equity Sales within first 24 Months of Issuance Date.  If, within 24 months after the Issuance Date while this Note is
outstanding, the Company sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes
of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents
entitling any person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price
(such lower price, the “Base Conversion Price” and such issuances, collectively, a “Dilutive Issuance”)
(if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price
adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights
per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price
per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion
Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal
the Base Conversion Price.  Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents
are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 4(d) in respect of an Exempt Issuance.
  The Company shall notify the Holders in writing, no later than the trading day following the issuance of any Common Stock
or Common Stock Equivalents subject to this section, indicating therein the applicable issuance price, or applicable reset price,
exchange price, conversion price and other pricing terms (such notice, the “Dilutive Issuance Notice”).  For
purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 4(d), upon the
occurrence of any Dilutive Issuance, the Holders are entitled to receive a number of Conversion Shares based upon the Base Conversion
Price on or after the date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Conversion Price
in the Notice of Conversion.

 

“Common Stock
Equivalents” means any securities of the Company which would entitle the holder thereof to acquire at any time Common
Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time
convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

 

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“Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees, officers, directors or consultants of the Company pursuant
to any stock or option plan duly adopted by the Board of Directors, (b) securities upon the exercise or exchange of or conversion
of any securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common
Stock issued and outstanding on the Issuance Date, provided that such securities have not been amended since the Issuance Date
to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities
(other than in connection with stock splits or combinations) or to extend the term of such securities, (c) securities issued pursuant
to acquisitions or strategic transactions, provided that any such issuance shall only be to a person (or to the equityholders of
a person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic
with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but
shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an
entity whose primary business is investing in securities, and (d) restricted shares of Common Stock without any registration rights
issued in satisfaction of up to $200,000 in pre-Closing indebtedness and trade payables.

 

(iv) Subsequent Equity
Sales within 12 months after first 24 Months of Issuance Date.  If, within 12 months after 24 months after the
Issuance Date while this Note is outstanding, in the event of the Dilutive Issuance, then the Conversion Price shall be reduced
and only reduced by multiplying the Conversion Price by a fraction, the numerator of which is the number of shares of Common Stock
issued and outstanding immediately prior to the Dilutive Issuance plus the number of shares of Common Stock which the offering
price for such Dilutive Issuance would purchase at the then Conversion Price, and the denominator of which shall be the sum of
the number of shares of Common Stock issued and outstanding immediately prior to the Dilutive Issuance plus the number of shares
of Common Stock so issued or issuable in connection with the Dilutive Issuance.

 

(e) Adjustment Certificate.
When any adjustment is required to be made in this Note or the Conversion Price under this Section, the Company shall promptly
mail to the Holder a certificate setting forth a brief statement of the facts requiring such adjustment and the Conversion Price
after such adjustment.

 

(f)          Elimination
of Fractional Interests. No fractional shares of Common Stock shall be issued upon conversion of this Note, nor shall the Company
be required to pay cash in lieu of fractional interests, it being the intent of the parties that all fractional interests shall
be eliminated and that all issuances of Common Stock shall be rounded up to the nearest whole share.

 

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(g) Limitations
on Exercises. 

 

(i)                       Beneficial
Ownership. Notwithstanding anything to the contrary contained in this Note, this Note shall not be convertible by the Registered
Holder hereof to the extent (but only to the extent) that the Registered Holder or any of its affiliates would beneficially own
in excess of 9.9% (the “Maximum Percentage”) of the Common Stock. To the extent the above limitation
applies, the determination of whether this Note shall be convertible (vis-à-vis other convertible, exercisable or exchangeable
securities owned by the Registered Holder or any of its affiliates) and of which such securities shall be convertible (as among
all such securities owned by the Registered Holder) shall, subject to such Maximum Percentage limitation, be determined on the
basis of the first submission to the Company for, conversion. No prior inability to conversion this Note pursuant to this paragraph
shall have any effect on the applicability of the provisions of this paragraph with respect to any subsequent determination
of exercisability. For the purposes of this paragraph, beneficial ownership and all determinations and calculations (including,
without limitation, with respect to calculations of percentage ownership) shall be determined in accordance with Section 13(d)
of the Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder. The provisions of this
paragraph shall be implemented in a manner otherwise than in strict conformity with the terms of this paragraph to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum Percentage beneficial ownership
limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such Maximum Percentage
limitation. The limitations contained in this paragraph shall apply to a successor Holder of this Note. The holders of Common Stock
shall be third party beneficiaries of this paragraph. For any reason at any time, upon the written or oral request of the Registered
Holder, the Company shall within one (1) Business Day confirm orally and in writing to the Registered Holder the number of shares
of Common Stock then outstanding, including by virtue of any prior conversion or conversion of convertible or exercisable securities
into Common Stock, including, without limitation, pursuant to this Note or securities issued pursuant to the Securities Purchase
Agreement.

 

(ii)         Principal
Market Regulation. In order to comply with the rules and regulations of the NYSE MKT, LLC (the “Principal Market”),
the Company shall not issue any shares of Common Stock upon conversion of this Note if the issuance of such shares of Common Stock
would, when added to the number of shares issued pursuant to the Warrant, exceed 32,324,456[1]
shares of Common Stock in the aggregate (the “Exchange Cap”), based upon the total issued and outstanding number
of shares of common stock as of the preceding trading day of the Issuance Date, except that such limitation shall not apply in
the event that the Company obtains the approval of its stockholders as required by the applicable rules of the Principal Market
for issuances of shares of Common Stock in excess of such amount. For so long as the Exchange Cap is applicable, no Registered
Holder shall be issued in the aggregate, upon conversion of any Notes, shares of Common Stock in an amount greater than the product
of (i) the Exchange Cap multiplied by (ii) the quotient of (1) the Purchase Price paid by such Registered Holder pursuant to the
Subscription Agreement divided by (2) the Purchase Price paid by all Registered Holders pursuant to the Securities Purchase Agreement
(with respect to each Registered Holder, the “Exchange Cap Allocation”). In the event that any Registered Holder
shall sell or otherwise transfer any of such Registered Holder’s Notes, the transferee shall be allocated a pro rata portion
of such Registered Holder’s Exchange Cap Allocation with respect to such portion of such Notes so transferred, and the restrictions
in this Section 4(g)(ii) shall apply to such transferee with respect to the portion of the Exchange Cap Allocation so allocated
to such transferee. Upon conversion in full of a holder’s Notes, the difference (if any) between such holder’s
Exchange Cap Allocation and the number of shares of Common Stock actually issued to such holder upon such holder's conversion or
exchange in full of such Notes shall be allocated to the respective Exchange Cap Allocations of the remaining holders of Notes
on a pro rata basis in proportion to the shares of Common Stock underlying the Notes then held by each such holder.

 

5.          Events
of Default. In the event that any of the following (each, an “Event of Default”) shall occur:

 

 

 

1
Such number represents 20% of total issued and outstanding shares of Common Stock as of December 2, 2015, minus one
share.

 

    	 	5	 

     

    

 

(a)          Non-Payment.
The Company shall default in the payment of the principal of, or accrued interest on, this Note as and when the same shall become
due and payable, whether by acceleration or otherwise, or shall fail to issue any securities upon the mandatory or voluntary conversion
provisions within five trading days after such securities are issuable pursuant to Section 4 of this Note; or

 

(b)          Default
in Covenants. The Company shall default in the observance or performance of the affirmative or negative covenants set forth
in the Offering Documents; or

 

(c)          Bankruptcy.
The Company shall: (a) admit in writing its inability to pay its debts as they become due; (b) apply for, consent to, or acquiesce
in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company or any of its property, or make a general
assignment for the benefit of creditors; (c) in the absence of such application, consent or acquiesce in, permit or suffer to exist
the appointment of a trustee, receiver, sequestrator or other custodian for the Company or for any part of its property; or (d)
permit or suffer to exist the commencement of any bankruptcy, reorganization, debt arrangement or other case or proceeding under
any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Company, and, if
such case or proceeding is not commenced by the Company or converted to a voluntary case, such case or proceeding shall be consented
to or acquiesced in by the Company or shall result in the entry of an order for relief; or

 

(d)          Judgments.         Any
final, non-appealable judgment, decree or order for the payment of money is entered against any of the Company, the Company’s
subsidiaries in an amount equal to the Minimum Amount and the same remains unsatisfied or unbonded for more than thirty (30) days;
or

 

(e)          Transfer
of Assets.         Any sale, transfer, assignment, conveyance, lease or
other disposition (whether in one transaction or in a series of transactions) of a substantial portion of the assets of the Company
(equal to or greater than 51% of same) (whether now owned or hereafter acquired), without the prior written consent of the Holder,
which consent shall not be unreasonably withheld; or

 

(f)          Non-Compliance;
Breach of Representations and Warranties. The Company fails to comply with, observe or perform as and when required any representation,
warranty, conditions or agreement or any other provision contained in the Offering Documents to be complied with or in connection
with any breach of the representations and warranties contained in the Offering Documents;

 

then, and so long as
such Event of Default is continuing for a period of five (5) business days in the case of non-payment under Section 5(a) and for
a period of thirty (30) calendar days in the case of events under Sections 5(b) through 5(f) (and the event which would constitute
such Event of Default, if curable, has not been cured), by written notice to the Company: (i) all amounts then unpaid under this
Note, including accrued but unpaid interest, shall bear interest at the default rate of fifteen percent (15%) per annum; and (ii)
all obligations of the Company under this Note shall be immediately due and payable (except with respect to any Event of Default
set forth in Section 5(c) hereof, in which case all obligations of the Company under this Note shall automatically become immediately
due and payable without the necessity of any notice or other demand to the Company) without presentment, demand, protest or any
other action nor obligation of the Holder of any kind, all of which are hereby expressly waived, and Holder may exercise any other
remedies the Holder may have at law or in equity.

 

    	 	6	 

     

    

 

6.          Affirmative
Covenants of the Company. The Company hereby agrees that, so long as the Note remains outstanding and unpaid, or any other
amount is owing to the Holder hereunder, the Company will:

 

(a)          Corporate
Existence and Qualification. Take the necessary steps to preserve its corporate existence and its right to conduct business
in all states in which the nature of its business requires qualification to do business.

 

(b)          Books
of Account. Keep its books of account in accordance with good accounting practices.

 

(c)          Insurance.
Maintain insurance with responsible and reputable insurance companies or associations, as determined by the Company in its sole
but reasonable discretion, in such amounts and covering such risks as is usually carried by companies engaged in similar businesses
and owning similar properties in the same general areas in which the Company operates.

 

(d)          Preservation
of Properties; Compliance with Law. Maintain and preserve all of its properties that are used or that are useful in the conduct
of its business in good working order and condition, ordinary wear and tear excepted and comply with the charter and bylaws or
other organizational or governing documents of the Company, and any law, treaty, rule or regulation, or determination of an arbitrator
or a court or other governmental authority, in each case applicable to or binding upon the Company or any of its property or to
which each the Company or any of its property is subject.

 

(e)          Taxes.
Duly pay and discharge all taxes or other claims, which might become a lien upon any of its property except to the extent that
any thereof are being in good faith appropriately contested with adequate reserves provided therefor.

 

(f)          Reservation
of Shares. The Company shall at all times have authorized, and reserved for the purpose of issuance, a sufficient number of
shares of Common Stock and issuable upon the voluntary conversion of this Note to provide for the issuance of all of the shares
(including the shares issuable for the Unpaid Interest Amount). Prior to complete conversion of this Note, the Company shall not
reduce the number of shares of Common Stock reserved for issuance hereunder without the written consent of the Holder except for
a reduction proportionate to a reverse stock split effected for a business purpose other than affecting the requirements of this
Section, which reverse stock split affects all shares of Common Stock equally.

 

(g)          Use
of Proceeds. The proceeds of this Note and the similar notes in this Offering will be used for the purposes described in the
Memorandum.

 

7.          Holder
Not Deemed a Stockholder. No Holder, as such, of this Note shall be entitled to vote or receive dividends or be deemed the
holder of shares of the Company for any purpose, nor shall anything contained in this Note be construed to confer upon the Holder
hereof, as such, any of the rights at law of a stockholder of the Company prior to the issuance to the Holder of the shares of
Common Stock which the Holder is then entitled to receive upon the due conversion of this Note.

 

    	 	7	 

     

    

 

8.          Mutilated,
Destroyed, Lost or Stolen Notes. In case this Note shall become mutilated or defaced, or be destroyed, lost or stolen, the
Company shall execute and deliver a new note of like principal amount in exchange and substitution for the mutilated or defaced
Note, or in lieu of and in substitution for the destroyed, lost or stolen Note. In the case of a mutilated or defaced Note, the
Holder shall surrender such Note to the Company. In the case of any destroyed, lost or stolen Note, the Holder shall furnish to
the Company: (i) evidence to its satisfaction of the destruction, loss or theft of such Note and (ii) such indemnity as may be
reasonably required by the Company to hold the Company harmless.

 

9.          Waiver
of Demand, Presentment, etc. The Company hereby expressly waives demand and presentment for payment, notice of nonpayment,
protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, bringing of suit and diligence
in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all
sums owing and to be owing hereunder, regardless of and without any notice, diligence, act or omission as or with respect to the
collection of any amount called for hereunder. The Company agrees that, in the event of an Event of Default, to reimburse the Holder
for all reasonable costs and expenses (including reasonable legal fees of one counsel) incurred in connection with the enforcement
and collection of this Note.

 

10.         Payment.
All payments with respect to this Note shall be made in lawful money of the United States of America, at the address of the Holder
as of the date hereof or as designated in writing by the Holder from time to time. The receipt by the Holder of immediately available
funds shall constitute a payment of principal and interest hereunder and shall satisfy and discharge the liability for principal
and interest on this Note to the extent of the sum represented by such payment. Payment shall be credited first to the accrued
interest then due and payable and the remainder applied to principal.

 

11.         Assignment.
The rights and obligations of the Company and the Holder of this Note shall be binding upon, and inure to the benefit of, the successors
and permitted assigns of the parties hereto. . Interest and principal are payable only to the registered Holder of this Note on
the books and records of the Company.

 

12.         Waiver
and Amendment. Any provision of this Note, including, without limitation, the due date hereof, and the observance of any term
hereof, may be amended, waived or modified (either generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Holder.

 

13.         Notices.
Any notice, request or other communication required or permitted hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or mailed by registered or certified mail, postage prepaid, or delivered by facsimile transmission,
to such party at its address or telecopier number set forth below, or such other address or telecopier number as such party may
hereinafter specify by notice to each other party thereto:

 

If to the Company, to:

 

Elephant Talk Communications
Corp

100 Park Avenue

New York, NY 10017

Tel: 31 20 635916

 

    	 	8	 

     

    

 

With a copy to:

 

Barry I. Grossman, Esq.

Ellenoff Grossman & Schole
LLP

1345 Avenue of the Americas

New York, NY 10105

Tel: (212) 370-1300, Fax: (212)
370-7889

 

If to the Holder:

 

The address set forth in the
Subscription Agreement

 

14.         Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of New York, excluding that body
of law relating to conflicts of laws.

 

15.         Consent
to Jurisdiction. Any legal suit, action or proceeding arising out of or relating to this Note shall be instituted exclusively
in New York Supreme Court, County of New York, or in the United Stated District Court for the Southern District of New York. The
parties hereto hereby: (i) waives any objection which they may now have or hereafter have to the venue of any such suit, action
or proceeding, and (ii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New York, and the United
States District Court for the Southern District of New York in any such suit, action or proceeding. The parties further agree to
accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York
Supreme Court, County of New York, or in the United States District Court for the Southern District of New York and agree that
service of process upon a party mailed by certified mail to such party’s address shall be deemed in every respect effective
service of process upon such party in any such suit, action or proceeding.

 

16.         Severability.
If one or more provisions of this Note are held to be unenforceable under applicable law, such provisions shall be excluded from
this Note, and the balance of this Note shall be interpreted as if such provisions were so excluded and shall be enforceable in
accordance with its terms.

 

17.         Headings.
Section headings in this Note are for convenience only, and shall not be used in the construction of this Note.

 

    	 	9	 

     

    

 

IN WITNESS WHEREOF,
the Company has caused this Note to be issued as of the date first above written.

 

	 	ELEPHANT TALK COMMUNICATIONS CORP

 

	 	By:	 	 
	 	 	Name:	Robert Harold (Hal) Turner
	 	 	Title:	Executive Chairman of the Board

 

    	 	10	 

     

    

 

Exhibit I

 

ELEPHANT TALK COMMUNICATIONS CORP

CONVERSION NOTICE

 

Reference is made to the 9% Unsecured Convertible
Promissory Note in the original principal amount of $___________ of Elephant Talk Communications Corp, a Delaware Company (the
“Company”), issued to the undersigned (the “Note”). In accordance with and pursuant to the terms of the
Note, the undersigned hereby elects to convert the entire outstanding principal amount due and owing under the Note, together with
all accrued but unpaid interest thereon, into shares of Common Stock, no par value per share, of the Company (the “Common
Stock”), by tendering the original of the Note for cancellation.

 

Please confirm the following information:

 

Principal Amount Outstanding

under the Note:                                                   

 

Accrued but unpaid interest

under the Note:________________________

 

Conversion Price:                                                       

 

Number of shares of Common Stock

to be issued: _________________________

 

Please issue the Common Stock into which
the Note is being converted in the following name and to the following address:

 

	Issue to:	
	 	
	 	 
	Address:	
	 	
	 	 
	Facsimile Number:	
	 	 
	Authorization:	

	 	By:	 
	 	Title:	 

 

Dated: ________________________

 

    	 	11EX-10.1

 Exhibit 10.1 

LIMITED WAIVER CREDIT AGREEMENT 

This Limited Waiver to Credit Agreement (this “Agreement”) entered into and made effective as of December 18, 2015 (the
“Waiver Effective Date”), is by and among NOW, Inc., as borrower (“Borrower”), the subsidiaries of the Borrower party hereto (each a “Guarantor” and collectively, the “Guarantors”),
the Lenders (as defined below) and Wells Fargo Bank, National Association, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), and as issuing lender and swing line lender under the Credit
Agreement. 
 RECITALS 

WHEREAS, the Borrower, the lenders from time to time party thereto (the “Lenders”), and the Administrative Agent are parties
to the Credit Agreement dated as of April 18, 2014 (the “Credit Agreement”); 
 WHEREAS, the Borrower may be unable to
cause the Interest Coverage Ratio as of the fiscal quarter ending December 31, 2015 to be greater than or equal to 3.00 to 1.00 as required under Section 6.8(b) of the Credit Agreement (the “Potential Default”) and the
Borrower will acknowledge that the Potential Default, if it occurs, would constitute an Event of Default arising under the Credit Agreement; 

WHEREAS, subject to the terms and conditions set forth herein, the parties hereto wish to provide a temporary waiver of the Potential Default;
and 
 NOW THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 

AGREEMENT 

Section 1. Defined Terms. As used in this Agreement, each of the terms defined in the opening paragraph and the Recitals
above shall have the meanings assigned to such terms therein. Each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expressly provided to the
contrary. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibits to this Agreement, unless otherwise specified. The words “hereof”, “herein”, and “hereunder” and
words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term “including” means “including, without limitation”. Section headings have
been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such Section headings are not a part of this Agreement and shall not be used in the interpretation of any provision of this Agreement. 

Section 2. Acknowledgment and Limited Waiver. 

(a) Each Credit Party hereby acknowledges and agrees that the Potential Default, if it occurs, would constitute an Event of Default for all
purposes under the Credit Agreement and the other Credit Documents. 
 (b) The Majority Lenders hereby agree, subject to the terms of this
Agreement, (i) to temporarily waive the Potential Default until the date (the “Waiver Termination Date”) that is the earlier to occur of (x) January 31, 2016, and (y) the date of the occurrence of any Default or
Event of Default (other than the Potential Default), and (ii) for the avoidance of doubt, until the Waiver Termination Date, the existence of the Potential Default, solely by itself, shall not be construed to result in any failure of the
Borrower to satisfy the conditions to borrowing under Section 3.3. 

 (c) The waiver by the Lenders described above is contingent upon the satisfaction of the
conditions precedent set forth in Section 4 below and is limited to the Potential Default. Such waiver is limited to the extent expressly described herein and shall not be construed to be a consent to or a permanent waiver of the Potential
Default or any other terms, provisions, covenants, warranties or agreements contained in the Credit Agreement or in any of the other Credit Documents. The Lender Parties reserve (i) the right to exercise any rights and remedies available to the
them in connection with such Potential Defaults on and after the Waiver Termination Date and (ii) the right to exercise any rights and remedies available to them in connection with any other present or future defaults with respect to the Credit
Agreement or any other provision of any Credit Document. The waiver by the Lenders described in this Section 2 is temporary in nature and such Potential Default shall, unless otherwise waived by the Majority Lenders, be immediately and
automatically reinstated on the Waiver Termination Date and shall constitute an “Event of Default” under the Credit Agreement and the other Credit Documents. 

(d) Each Credit Party hereby further agrees and acknowledges that (i) the Potential Default has not been permanently waived as a result
of this Agreement and that such waiver is temporary in nature, and (ii) from and after the Waiver Termination Date, all rights and remedies of the Lenders enjoined as a result of this Section 2 shall, unless otherwise waived by the
Majority Lenders, be reinstated. 
 Section 3. Representations and Warranties. Each Credit Party hereby represents and
warrants that, as of the date hereof: (a) after giving effect to this Agreement, the representations and warranties of the Credit Parties contained in the Credit Documents are true and correct in all material respects (except that such
materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof) on and as of the date hereof, except that any representation and warranty which by its
terms is made as of a specified date shall be true and correct only as of such specified date; (b) after giving effect to this Agreement, no Default or Event of Default has occurred and is continuing; (c) the execution, delivery and
performance of this Agreement are within the limited liability company or corporate power and authority of such Credit Party and have been duly authorized by appropriate limited liability company and corporate action and proceedings; (d) this
Agreement constitutes the legal, valid, and binding obligation of such Credit Party enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of
creditors generally and general principles of equity, and no portion of the Obligations are subject to avoidance, subordination, recharacterization, recovery, attack, offset, counterclaim, or defense of any kind; (e) there are no governmental
or other third party consents, licenses and approvals required in connection with the execution, delivery, performance, validity and enforceability of this Agreement; and (f) the Credit Parties, on a consolidated basis, are Solvent. 

Section 4. Conditions to Effectiveness. This Agreement shall become effective on the Waiver Effective Date and enforceable
against the parties hereto upon the occurrence of the following conditions which may occur prior to or concurrently with the closing of this Agreement: (a) the Administrative Agent shall have received this Agreement executed by duly authorized
officers of the Borrower, the Guarantors, the Administrative Agent and the Majority Lenders; and (b) the Borrower shall have paid all reasonable and documented fees and expenses of the Administrative Agent’s outside legal counsel pursuant
to all invoices presented for payment on or prior to the Waiver Effective Date. 

  
 2- 

 Section 5. Acknowledgments and Agreements. 

(a) Each Credit Party acknowledges that on the date hereof all outstanding Obligations are payable in accordance with their terms and each
Credit Party waives any defense, offset, counterclaim or recoupment with respect thereto. 
 (b) The description herein of the
Potential Default is based upon the information provided to the Lenders on or prior to the date hereof and shall not be deemed to exclude the existence of any other Defaults or Events of Default. The failure of the Lenders to give notice to any
Credit Party of any such other Defaults or Events of Default is not intended to be nor shall be a waiver thereof. Each Credit Party hereby agrees and acknowledges that the Lender Parties require and will require strict performance by the Credit
Parties of all of their respective obligations, agreements and covenants contained in the Credit Agreement and the other Credit Documents (including any action or circumstance which is prohibited or limited during the existence of a Default or Event
of Default), and no inaction or action by any Lender Party regarding any Default or Event of Default (including but not limited to the Potential Default) is intended to be or shall be a waiver thereof (other than the temporary waiver thereof
expressly provided in Section 2 above). Each Credit Party hereby also agrees and acknowledges that no course of dealing and no delay in exercising any right, power, or remedy conferred to any Lender Party in the Credit Agreement or in any other
Credit Documents or now or hereafter existing at law, in equity, by statute, or otherwise shall operate as a waiver of or otherwise prejudice any such right, power, or remedy. 

(c) The Lender Parties hereby expressly reserve all of their respective rights, remedies, and claims under the Credit Documents. Except as
expressly provided in this Agreement, nothing in this Agreement shall constitute a waiver or relinquishment of (i) any Default or Event of Default (including, without limitation, the Potential Default) under any of the Credit Documents,
(ii) any of the agreements, terms or conditions contained in any of the Credit Documents, (iii) any rights or remedies of any Lender Party with respect to the Credit Documents, or (iv) the rights of any Lender Party to collect the
full amounts owing to them under the Credit Documents.  
 (d) Each party hereto hereby adopts, ratifies, and confirms the Credit
Agreement and acknowledges and agrees that the Credit Agreement is and remains in full force and effect, and the Borrower and Guarantors acknowledge and agree that their respective liabilities and obligations under the Credit Agreement, the other
Credit Documents, and the Guaranty Agreements, are not impaired in any respect by this Agreement. 
 (e) This Agreement is a Credit Document
for the purposes of the provisions of the other Credit Documents. Without limiting the foregoing, any breach of representations, warranties, and covenants under this Agreement shall be a Default or Event of Default, as applicable, under the Credit
Agreement. 
 Section 6. Reaffirmation of the Guaranty. Each Guarantor hereby ratifies, confirms, acknowledges and agrees
that its obligations under the Guaranty Agreement are in full force and effect and that such Guarantor continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by
acceleration or otherwise, all of the Guaranteed Obligations (as defined in the Guaranty Agreement), as such Guaranteed Obligations may have been amended by this Agreement, and its execution and delivery of this Agreement does not indicate or
establish an approval or consent requirement by such Guarantor under the Guaranty, in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement or any of the other Credit Documents. 

  
 3- 

 Section 7. Governing Law. This Agreement shall be deemed a contract under, and
shall be governed by, and construed and enforced in accordance with, the laws of the State of New York without regard to conflicts of laws principles (other than Sections 5-1401 and 5-1402 of the General Obligations Law of the State of New York).

 Section 8. Counterparts. This Agreement may be signed in any number of counterparts, each of which shall be an
original and all of which, taken together, constitute a single instrument. This Agreement may be executed by facsimile signature or by electronic mail (including via any “.pdf” or other similar electronic means) and all such signatures
shall be effective as originals. 
 Section 9. Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement. 

Section 10. Invalidity. In the event that any one or more of the provisions contained in this Agreement shall for any
reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement. 

Section 11. Entire Agreement. THIS AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND SUPERSEDE ALL PRIOR UNDERSTANDINGS AND AGREEMENTS, WHETHER WRITTEN OR ORAL, RELATING TO THE TRANSACTIONS PROVIDED FOR HEREIN AND THEREIN. ADDITIONALLY, THIS AGREEMENT, THE CREDIT AGREEMENT, THE NOTES, AND THE OTHER
CREDIT DOCUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. 

[SIGNATURES BEGIN ON NEXT PAGE] 

  
 4- 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by their respective duly authorized officers as of the Effective Date. 
  

			
	BORROWER:
	
	NOW INC.
		
	By:	 	 /s/ Daniel L. Molinaro

		 	 Daniel Molinaro

		 	 Senior Vice President and Chief Financial Officer

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	GUARANTORS:
	
	DNOW L.P.
	
	 By: Wilson International, Inc., its general partner

		
	By:	 	 /s/ Daniel L. Molinaro

		 	 Daniel Molinaro

		 	 President & Treasurer

	
	NOW MANAGEMENT, LLC
		
	By:	 	 /s/ Daniel L. Molinaro

		 	 Daniel Molinaro

		 	 President & Treasurer

	
	WILSON INTERNATIONAL, INC.
		
	By:	 	 /s/ Daniel L. Molinaro

		 	 Daniel Molinaro

		 	 President & Treasurer

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	ADMINISTRATIVE AGENT/LENDERS/ISSUING LENDER/SWINGLINE LENDER:
	
	WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Issuing Lender, Swingline Lender, and a Lender

 
			
		
	By:	 	/s/ Donald W. Herrick, Jr.

 
			
	Name:	 	Donald W. Herrick, Jr.
	Title:	 	Director

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	 ROYAL BANK OF CANADA

	as a Swingline Lender and a Lender

 
			
		
	By:	 	/s/ Nicole Bradshaw

 
			
	Name:	 	Nicole Bradshaw
	Title:	 	VP-Finance, National Client Group

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	BARCLAYS BANK PLC
	as a Lender

 
			
		
	By:	 	/s/ Jonathan Wilson

 
			
	Name:	 	Jonathan Wilson
	Title:	 	Director

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	CITIBANK, N.A.
	as a Lender

 
			
		
	By:	 	/s/ Ivan Davey

 
			
	Name:	 	Ivan Davey
	Title:	 	Vice President

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	DNB CAPITAL LLC
	as a Lender

 
			
		
	By:	 	/s/ Jill Ilski

 
			
	Name:	 	Jill Ilski
	Title:	 	First Vice President

 
			
		
	By:	 	/s/ Elnar Gulstad

 
			
	Name:	 	Elnar Gulstad
	Title:	 	Senior Vice President

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	FIFTH THIRD BANK
	as a Lender

 
			
		
	By:	 	/s/ Matthew Lewis

 
			
	Name:	 	Matthew Lewis
	Title:	 	Vice President

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	HSBC BANK USA, NATIONAL ASSOCIATION
	as a Lender

 
			
		
	By:	 	/s/ Steven Smith

 
			
	Name:	 	Steven Smith
	Title:	 	Director

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	JPMORGAN CHASE BANK, N.A.
	as a Lender

 
			
		
	By:	 	/s/ Thomas Okamoto

 
			
	Name:	 	Thomas Okamoto
	Title:	 	Authorized Officer

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	PNC BANK, NATIONAL ASSOCIATION
	as a Lender

 
			
		
	By:	 	/s/ Jonathan Luchansky

 
			
	Name:	 	Jonathan Luchansky
	Title:	 	Vice President

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.) 

 
			
	THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
	as a Lender

 
			
		
	By:	 	/s/ Mark Oberreuter

 
			
	Name:	 	Mark Oberreuter
	Title:	 	Vice President

  
 Signature Page to
Limited Waiver to Credit Agreement 
 (NOW Inc.)

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