SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

___________

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported) November 17, 2015 (November 16, 2015)

 

ELEPHANT TALK COMMUNICATIONS CORP.

(Exact name of registrant as specified in Charter)

 

 

Delaware 000-030061 95-4557538
     
(State or other jurisdiction of
incorporation) 		(Commission File Number) (IRS Employer
Identification No.)

  

 

100 Park Avenue, New York City, New York 10017, United States of America

(Address of Principal Executive Offices) (Zip Code)

 

Registrant's telephone number, including area code: +31.20.653.5916

 

N/A

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below:

 

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

Item 5.02   Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On November 12, 2015, upon the recommendation of the Nominating and Corporate Governance Committee (the “ Nominating Committee ”) of the Board of Directors (the “ Board ”) of Elephant Talk Communications Corp. (the “ Company ”), the Board appointed per effective date November 16, 2015 Robert Harold (Hal) Turner to be the Executive Chairman of the Board and Mr. Turner accepted such appointment. On the same effective day, the Board appointed Mr. Tim Payne as the interim Chief Executive Officer.

 

Effective upon the appointments described above, Mr. Steven van der Velden resigned from the Board and the Chief Executive Officer position for personal reasons. Mr. van der Velden did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

 

Mr. van der Velden has also withdrawn himself as a nominee for director at our 2015 annual meeting of stockholders. In connection with his resignation, Mr. van der Velden will receive a severance payment (the “ Severance Payment ”) of Euro 660,000 (approximately US$ 710,750) pursuant to certain Severance Agreement (the “ Severance Agreement ”). Mr. van der Velden shall receive the Severance Payment in the form of equity upon the terms and conditions of the Company’s equity financing that is consummated within six (6) months of the effective date of the Severance Agreement. In the event an equity financing is not consummated within six (6) months of the effective date of Severance Agreement, Mr. van der Velden will receive the Severance Payment upon mutually acceptable terms. The foregoing description of the Severance Agreement does not purport to be complete and is qualified in its entirety by the full text of the Severance Agreement, a copy of which is hereby filed as Exhibit 10.1 and is incorporated by reference herein.

 

Any shares voted by proxy for the election of Mr. van der Velden as a director at our 2015 annual meeting of stockholders (“ Annual Meeting ”), scheduled to be held on Wednesday December 16, 2015 at 10:00 a.m. EST at the offices of Ellenoff Grossman & Schole LLP at 1345 Avenue of the Americas, New York, NY 10105, will instead be voted for the election of Mr. Turner, as substitute nominee.

 

Mr. Turner was the founder, chairman and CEO of ComCloud Corporation in Columbia SC between May 2011 and December 2013. Mr. Turner served as a director, chairman and an advisor to NeoNova Network Services in Raleigh NC between 2010 and 2013. He also served as a chairman of the board of directors of Airewire, Inc. in Atlanta GA from May 2011 to May 2012. He was the chief executive officer of Pac West Telecomm, Inc. in San Francisco CA between 2007 and May 2011. Mr. Turner has extensive experience in the operation and financing of technology and telecom companies.  Mr. Turner obtained his MBA degree in University of South Carolina in 1973 and Bachelor of Science in Marking in University of South Carolina in 1972. We believe that Mr. Turner is qualified to serve as the Executive Chairman of our Board.

 

  As compensation for his service as a director, Mr. Turner will receive an annual base salary of $300,000, to be paid monthly in arrears. The Board may from time to time review and revise the salary, if necessary depending on relevant benchmark-numbers and peer companies. Upon achievement of certain milestone, Mr. Turner may be entitled to receive $75,000 of cash bonus and 150,000 restricted shares of the Company. Mr. Turner is also entitled to receive 2,500,000 options exercisable by November 11, 2022, i.e. within 7 years of grant. The exercise price is $0.33, being the closing price of the shares of our common stock on the effective day of the appointment, November 16, 2015.

 

2  

 

 

Since the beginning of the Company’s last fiscal year, Mr. Turner has not been a party to any transaction, or any currently proposed transaction, in which the Company was or is to be a participant and the amount involved exceeds $120,000, or in which any related person of Mr. Turner had or will have a direct or indirect material interest.

 

Prior to the appointment of Interim Chief Executive Officer of the Company, Mr. Payne has been serving as the President of Elephant Talk North America, a wholly owned subsidiary of the Company since April 2014. He was the senior national sales leader with Verizon Telematics (an affiliate of Verizon (NYSE: VZ, a leading broadband  and telecommunications company in the U.S. ) from February 2008 to March 2014.

 

There are no arrangements or understandings between Mr. Payne and any other persons pursuant to which Mr. Payne was appointed as an officer of the Company. In addition, there are no family relationships between Mr. Payne and any director, executive officer, or person nominated or chosen by the Company to become a director or executive officer. Furthermore, since the inception of the Company, there have been no transactions in which the Company was or is to be a participant and the amount involved exceeds $120,000, and in which Mr. Payne had or will have a direct or indirect material interest, and there are currently no such proposed transactions.

 

Item 9.01 Exhibits

 

(d) Exhibits

 

Exhibit  
    No. Description
  10.1 Severance Agreement dated November 16, 2015
  99.1 Press Release announcing the management change dated November 17, 2015

 

3  

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

 

     

  Dated: November 17, 2015

 

ELEPHANT TALK COMMUNICATIONS CORP.
     
  By:   /s/ Alex Vermeulen  
  Alex Vermeulen
  General Counsel

 

4  

Exhibit 10.1

 

SEVERANCE AGREEMENT

 

WHEREAS, Steven van der Velden (“Executive”) and Elephant Talk Communications Corp. (the “Company”) wish to enter into an agreement to effectuate Executive’s resignation as an employee, officer, and director of the Company and its subsidiaries on the terms and conditions set forth below;

 

WHEREAS, Executive is Chief Executive Officer and Executive Chairman of the Company and a member of the Board of Directors;

 

WHEREAS, Executive is an officer or director of several subsidiaries of the Company;

 

WHEREAS, Executive and the Company desire to fully and finally resolve and settle any and all issues between them, actual or potential, whether or not relating to Executive’ employment with the Company, or his status as a director; and

 

WHEREAS, in consideration of the Company providing certain promises and benefits as explained herein, including a general release of all claims against Executive, Executive has agreed to a general release of all claims and to the other promises contained herein.

 

NOW, THEREFORE, intending to be legally bound, the Company and Executive agree, effective as of the date on which both of the parties have executed this Agreement (the “Effective Date”), as follows:

 

A. Effective November 16, 2015 (the “Effective Date”), Executive is resigning from all offices and positions with the Company, its parents, subsidiaries, and affiliates. Executive shall have no further rights, duties and authorities as an Executive and shall not be entitled to any further compensation or non-vested benefits, except as provided in this Agreement.

 

B. As of the Effective Date, Executive: (i) shall have no further duties to the Company and shall not be required to attend work; (ii) shall have no authority to take any action, incur any obligation, or incur any expense, on behalf of the Company or any of its subsidiaries; provided, however, that over the two-week period immediately after the Effective Date, Executive shall (x) transition his former duties and responsibilities to such individuals as the Executive Chairman or Chief Executive Officer of the Company (“CEO”) may designate in writing, including to his successor, and (y) provide such assistance, if any, as may be reasonably requested by the CEO and Executive Chairman.

 

C. As consideration for the agreements from Executive herein, the Executive shall be entitled to a severance payment (the “Severance Payment”) with a value equal to Euro 660,000, payable as set forth in Paragraph F below.  In addition, Executive shall have the right to exercise the 1,200,000 options granted to him on December 4, 2013 through December 4, 2018. Furthermore, as described below, the Company will provide Executive a general release of any and all claims the Company may have against him.  This Agreement will not become effective until Executive delivers an executed copy of this Agreement and the Company delivers an executed copy of this Agreement.

 

 

 

 

D. Except for the rights of the Executive and the duties and obligations of the Company under this Agreement, in consideration for the Severance Payment, and for other good and valuable consideration, Executive completely releases all claims against the Company, its parent and affiliate companies, subsidiaries, divisions, business units, committees, groups, insurers and its or their predecessors or successors (the “Releasees”) and each of the Releasees’ executors, administrators, successors, trustees, assigns, subsidiaries, officers, directors, shareholders, employees, legal representatives, and agents of each of them, from all actions, causes of action, suits, debts, dues, covenants, contracts, bonuses, controversies, agreements, promises, claims, charges, complaints and demands whatsoever in law or equity, which against the Releasees, Executive or Executive’s heirs, executors, administrators, successors, and/or assigns, may now have or hereinafter can, shall or may have for, upon, or by reason of any matter, cause or thing whatsoever, from the beginning of the world to the day and date of this Severance Agreement, including, but not limited to, those pertaining to any federal, state or local human rights, civil rights, pension or labor laws, rules and/or regulations, constitutions, ordinances, public policy, contract or tort laws, or any claim arising under the common law, or any other action based upon any conduct occurring up to and including the date of the complete execution of this Severance Agreement, and shall not seek or accept any award or settlement from any such source or proceeding. Additionally, Executive, in further consideration for the payment listed above, and for other good and valuable consideration, agrees that Executive will lend no voluntary assistance whatsoever to any person pursuing any type of claim against Company based on any transaction, act or omission of Company involving or relating to the refusal to hire, the termination, the layoff, the discharge or any other adverse employment action with respect to any applicant for employment, employee or former employee of Company. The Executive’s general release and waiver of claims excludes, and Executive does not waive, release or discharge, any of Executive’s rights to defense costs or  indemnification from the Company, or from any of the Company’s insurers, with respect to any claims regarding actions by Executive prior to the Resignation Date.  The Company agrees to maintain a policy of directors and officers’ liability insurance that provides Executive with coverage with respect to any claims made in connection with Executive’s employment with the Company on the same basis as is provided to the Company’s continuing officers and directors.

 

E. Except for the rights of the Company and the duties and obligations of Executive under this Agreement, the Company, for and on behalf of its subsidiaries, affiliates, shareholders, officers, directors, successors and assigns (collectively referred to as “the Company Releasors”), hereby agrees to, and does, remise, release and forever discharge Executive, his heirs, beneficiaries, executors, administrators, agents, representatives, insurers, attorneys, successors and assigns (“collectively referred to as the “Executive Releasees”) from any and all matters, claims, demands, damages, causes of action, debts, liabilities, controversies, judgments and suits of every kind and nature whatsoever, foreseen or unforeseen, known or unknown, which have arisen or could arise between the Company Releasors and the Executive Releasees from all matters which occurred prior to the Effective Date, which matters include, but are not limited to, Executive’s employment with the Company, the terms and conditions of that employment, Executive’s compensation, the termination of Executive’ employment with the Company, Executive’s compensation, the termination of Executive’ employment with the Company, Executive’s directorship, Executive’s shareholder status, any acts or actions taken by Executive as an employee, officer, director or shareholder of the Company. Executive’s status as a holder of stock options, Executive’ status as a participant in any stock option plan, or equity rights plan, and matters arising from the offer and acceptance of this Agreement. The Company understands that the provisions of this paragraph mean that except as provided herein neither the Company nor the Company Releasors can bring a lawsuit against Executive arising out of any actions or failures to act on the part of Executive and the Executive Releasees arising before the Effective Date. The release set forth in this paragraph 5(c) covers and includes not only rights or claims that the Company may have in its own right, but also all other rights or claims of whatever nature that might be asserted on behalf of the Company or the Company Releasors against any of the Executive Releasees.

 

 

 

 

F. Upon the closing of an equity financing within six (6) months of the Effective Date, Executive shall receive an amount equal to the entire Severance Payment as if the Executive had participated in the equity financing in the Company on the same term as the investors in the financing or, in the event an equity financing is not consummated within six (6) months of the Effective Date, Executive receive an amount equal to the entire Severance Payment as if the Executive had invested the Severance Payment in the Company on mutually acceptable terms. 

 

G. Executive has been advised to consult with an attorney regarding this Severance Agreement.

 

H. This Agreement may only be modified, altered or changed in writing, signed by the Parties. This Agreement shall be subject to and governed by the laws of the State of New York without giving effect to principles of conflicts of law.

 

 

MY SIGNATURE BELOW ATTESTS TO THE FACT THAT I HAVE READ, UNDERSTAND, AND AGREE TO BE LEGALLY BOUND TO ALL OF THE ABOVE TERMS. I UNDERSTAND THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

 

 

 

 

By: /s/ Steve van der Velden

Name: Steve van der Velden

Date: November 16, 2015; 6 p.m. EST

 

 

 

 

AGREED AND ACKNOWLEDGED:

 

Elephant talk communications corp

 

 

By: /s/ Alex Vermeulen

Name: Alex Vermeulen

Title: General Counsel

Date: November 16, 2015

 

 

Exhibit 99.1

 

   

 

Elephant Talk Communications Announces the Appointment of Robert H. Turner as Executive Chairman; Names ETNA President Tim Payne as Interim CEO

 

- Robert H. Turner, Former Executive at AT&T and BellSouth Communications, Inc., Brings 40-Years of Global
Telecom and Communications Technology Leadership to Company to Drive Growth and Expansion -

 

NEW YORK CITY, NY — November 17, 2015 - Elephant Talk Communications Corp. (NYSE MKT: ETAK) (“Elephant Talk” or the “Company”), a global provider of Software Defined Network Architecture (ET Software DNA® 2.0) platforms and cyber security solutions, today announced that the Company has appointed Robert H. Turner (“Hal Turner”) as Executive Chairman and Tim Payne, the current President of Elephant Talk North America (“ETNA”), as interim CEO. Together, both appointees will be responsible for managing and growing Elephant Talk’s global operations. Mr. Steven van der Velden has stepped down as Chairman, CEO and a director of the Company.

 

Mr. Turner brings over 40 years of international C-level global telecom and communications technology experience to Elephant Talk gained through a career leading and servicing major Tier 1, 2, and 3, incumbent and competitive (MVNO/CLEC/ISP/Cable) wireless and wired operators. Mr. Turner’s expertise includes decades of P&L leadership, M&A, joint ventures, strategic alliances and global partnerships gained through a career including Senior Sales and Marketing roles at AT&T, President and Chief Operating Officer of BellSouth Communications, Inc. (now AT&T) and serving as Chairman, CEO and President of several international voice and data services/networking companies including PTT Telecom Netherlands US, Inc. (now KPN), TeleZone, Inc. (Toronto, Canada) and Davnet Limited (Sydney, Australia).

 

"On behalf of the Board and the entire management team at Elephant Talk, we are excited to welcome Hal Turner to the Company. We believe he has the ideal mix of business strategy, global management and technology expertise that is needed to advance our industry-leading solutions and add to our growing global customer base that includes Tier 1 customers in the US, Brazil, Europe and the Middle East,” said Mr. Carl Stevens, Member of the Board. “Supported by a dedicated and focused team along with technology that is delivering the highest performance and most reliable services in the industry, Hal will play a vital role in further scaling-up the organization while managing its growth and cost structure ensuring we deliver value for our shareholders.”

 

“This is an exciting time to be joining a company like Elephant Talk which has created and delivered remarkable technology solutions to MNOs and MVNOs. Elephant Talk’s products are at the leading edge of performance and reliability, leveraging technologies such as SDN, NFV and the cloud to overcome the critical cost and competitive issues now facing mobile operators around the globe,” said Robert H. Turner, newly appointed Executive Chairman of the Board of Elephant Talk Communications Corp. “Thanks to the work done by the Board and the senior team at Elephant Talk, the Company is now well positioned to deliver on the promise of its proprietary technology and it is my goal to ensure that the business capitalizes on this opportunity to supply its best-in-class products and customer support, and do so efficiently and profitably.”

 

 

Elephant Talk Communications Corp.

100 Park Avenue, New York City, NY 10017

212-984-1096

 

 

 

   

 

“We would also like to thank Steven van der Velden for his many years of hard work and dedication to Elephant Talk. We look forward to Steven remaining a very large shareholder of the Company and wish him much success in all his future endeavors,” continued Mr. Carl Stevens, on behalf of the Board of Directors.

 

Recently, Mr. Turner served as Chairman of Pandora Networks, Inc. (now named Panterra Networks), CEO at Pac West Telecomm, Inc. and for the past 28 years, founder at Turner Telecom Holdings Group, LLC, an executive management and board services consultancy and advisory firm focused on serving leading-edge telecom, software and technology companies from start-ups to turnaround, worldwide. Mr. Turner is a featured contributor to key publications in the wireless, networking and technology industries and is also a guest lecturer at The Darla Moore School of Business at The University of South Carolina.

 

Mr. Payne has been President of Elephant Talk North America since April 2014. Tim has over 20 years of domestic US telecom experience driving sales and distribution programs at top telecommunication companies including serving as Senior National Sales Leader at Verizon Telematics, National Sales Manager at Networkfleet, General Manager at Clearwire and District Manager at Sprint Nextel.

 

About Elephant Talk Communications Corp.:

Elephant Talk Communications Corp. (NYSE MKT: ETAK) is a global provider of mobile proprietary Software Defined Network Architecture (ET Software DNA® 2.0) platforms for the telecommunications industry. The Company empowers Mobile Network Operators (MNOs), Mobile Virtual Network Operators (MVNOs), Enablers (MVNEs) and Aggregators (MVNAs) with a full suite of applications, reliable industry expertise and high quality customer service without the need for substantial upfront investment. Elephant Talk counts several of the world’s leading MNOs and technology companies amongst its customers and partners, including Vodafone, T-Mobile, Zain, HP and Affirmed Networks. Visit: www.elephanttalk.com .

 

About ValidSoft UK Ltd.:

ValidSoft, a subsidiary of Elephant Talk Communications Corp., secures transactions using personal authentication and device assurance. We enable our customers to enhance their security while improving their user experience, utilising our multi-factor authentication platform, Voice Biometric engine and Device Trust technology, all of which may be used as ‘stand-alone’ or integrated into multi-vendor solutions. ValidSoft serves multiple clients across the financial services, government and enterprise sectors and is the only company to have been granted four European Privacy Seals, reflecting its commitment to strong data privacy. Visit: www.validsoft.com .

 

Forward-Looking Statements:

Certain statements contained herein constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, without limitation, statements with respect to Elephant Talk's plans and objectives, projections, expectations and intentions (including, without limitation, Elephant Talk’s plans regard its ValidSoft subsidiary). These forward-looking statements are based on current expectations, estimates and projections about Elephant Talk's industry, management's beliefs and certain assumptions made by management. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Because such statements involve risks and uncertainties, the actual results and performance of Elephant Talk may differ materially from the results expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. Unless otherwise required by law, Elephant Talk also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made here. Additional information concerning certain risks and uncertainties that could cause actual results to differ materially from those projected or suggested in Elephant Talk's filings with the Securities and Exchange Commission, copies of which are available from the SEC or may be obtained upon request from Elephant Talk.

 

 

Contacts:

 

Investor Contact:

Alan Sheinwald or Valter Pinto

Capital Markets Group, LLC

(914) 669-0222

valter@capmarketsgroup.com

www.CapMarketsGroup.com

 

Public Relations:

Michael Glickman

MWGCO, Inc.

917-397-2272

mike@mwgco.net

 

 

Elephant Talk Communications Corp.

100 Park Avenue, New York City, NY 10017

212-984-1096