PURCHASE AGREEMENT

 

This Purchase Agreement (this “Agreement”), dated as of June 11, 2013, is made
by and between [Name of Seller] (the “Seller”) and Elephant Talk Communications
Corp., a Delaware corporation (the “Company”). The Seller and the Company are
sometimes individually referred to herein as a “Party” and collectively referred
to herein as the “Parties.”

 

W I T N E S S E T H:

 

WHEREAS, the Company issued 8% Senior Secured Convertible Notes due May 1, 2014
(the “Notes”) to the Seller pursuant to the terms of that certain Securities
Purchase Agreement, dated as of March 29, 2012, by and among the Company and the
Purchasers listed on Exhibit A thereto (the “SPA”); and

 

WHEREAS, the Company has entered into securities purchase agreements with
certain investors whereby the Company has agreed to sell to such investors, and
such investors have agreed to purchase from the Company, 17,595,308 shares of
the Company’s common stock and warrants to purchase 7,917,889 shares of the
Company’s common stock (the “Warrants”) in a registered direct offering as
described in the Company’s Current Report on Form 8-K filed with the Securities
and Exchange Commission on June 11, 2013 (the “Equity Offering”);

 

WHEREAS, the Company expects to receive aggregate gross proceeds of $12,000,000
from the Equity Offering (“Gross Proceeds”);

 

WHEREAS, the Company is seeking from the Seller and each of the other holders of
the Notes a waiver of Sections 3.16 and 3.17 of the SPA as it relates to the
issuance of the Warrants in the Equity Offering;

 

WHEREAS, pursuant to Section 7.3 of the SPA, no provision of the SPA may be
waived except in a written instrument signed by Purchasers (as defined in the
SPA) holding at least two-thirds of the outstanding principal amount of the
Notes;

 

WHEREAS, the Company wishes to use a portion of the Gross Proceeds to purchase
from the Seller all of the Notes held by the Seller, and the Seller wishes to
sell all of its Notes to the Company, upon the terms and subject to the
conditions set forth herein; and

 

WHEREAS, the Notes are secured by all of the assets of the Company and its
subsidiaries pursuant to a Security Agreement (the “Security Agreement”), dated
March 29, 2013, by and between the Company and JGB Collateral LLC, as collateral
agent for the holders of the Notes (the “Agent”) and certain other security
agreements, pledge agreements, deeds and/or fixed and floating charges entered
into by the Company or its subsidiaries in connection therewith (collectively
with the Security Agreement, the “Security Documents”).

 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

 

 

 

 

Article I.

TERMS OF PURCHASE AND SALE

 

Section 1.01 Waiver of Sections 3.16 and 3.17 of the SPA. Subject to and
effective only upon the Company’s performance in full of Section 1.02 and
Section 1.03, the Seller waives Section 3.16 of the SPA as it relates to the
issuance of the Warrants in the Equity Offering solely to permit the issuance of
the Warrants in connection with the consummation of the Equity Offering. Subject
to and effective only upon the Company’s performance in full of Section 1.02 and
Section 1.03, the Seller also waives Section 3.17 of the SPA as it relates to
the terms of the Warrants issuable in the Equity Offering. The waiver set forth
above shall be limited precisely as written and relates solely to the provisions
of Section 3.16 and Section 3.17 of the SPA in the manner and to the extent
described above, and nothing in this Agreement shall be deemed to constitute a
waiver of compliance by the Company with respect to any other term, provision or
condition of the Agreement or any other Transaction Document (as defined in the
SPA), or any other instrument or agreement referred to therein. Nothing
contained in this Agreement will be deemed or construed to amend, supplement or
modify the Agreement (including, without limitation, the provisions of Section
3.16 and Section 3.17 thereof) or otherwise affect the rights and obligations of
any party thereto, all of which remain in full force and effect. For the
avoidance of doubt, if the Company fails to satisfy any provision of Section
1.02 or 1.03 hereof, the waiver set forth in this Section 1.01 shall be void ab
initio.

 

Section 1.02 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, effective as of the Closing, the Seller agrees to sell
and assign to the Company, and the Company agrees to purchase from the Seller,
$[ ] aggregate principal amount of the Notes held by the Seller (the “Subject
Notes”).

 

Section 1.03 Consideration. As consideration for the purchase of the Subject
Notes, the Company shall pay to the Seller an amount in cash equal to $[ ] plus
accrued and unpaid interest through and including the Closing Date (as defined
below) (the “Purchase Price”) for all of the Subject Notes. The Company shall
pay the Purchase Price to the Seller on the Closing Date by wire transfer of
immediately available funds.

 

Section 1.04 Closing. The closing of the transactions contemplated by this
Agreement (the “Closing”) shall take place simultaneously with the closing of
the Equity Offering (the “Closing Date”). If the Closing has not occurred by
June 15, 2013, the Seller may, at its option, terminate this Agreement by
delivering a written notice to the Company and, upon such termination, the
Seller shall have no further obligation or liability hereunder. Any such
termination shall be without prejudice to the Seller’s rights and remedies.

 

Section 1.05 Delivery of Subject Notes. The Seller shall use its commercially
reasonable efforts to return the Subject Notes to the Company not later than 15
days after the Closing Date.

 

Section 1.06 Certain Costs. The Company acknowledges and agrees that the
preparation and filing of any UCC termination statements or any other documents
or instruments that are necessary, appropriate or desirable for the release of
any lien, encumbrance or security interest created in favor of the Agent
pursuant to the Security Documents (“Lien Releases”) shall be at the Company’s
sole cost and expense. The Company hereby agrees to reimburse, indemnify and
hold the Seller and the Agent harmless against any and all costs or other
liabilities incurred by either of them in connection with any Lien Release.

 

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Article II.

REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS

 

Section 2.01 Representations. The Seller represents and warrants that it has
good and marketable title to the Subject Notes. The Company represents that
neither the execution, delivery or performance of this Agreement nor the
consummation of the transactions contemplated hereby violates, conflicts with,
constitutes a default under, results in the acceleration of or creates in any
party the right to accelerate, terminate, modify or cancel any material contract
to which the Company is a party or by which the Company is bound. Each Party
represents that (a) it has the legal capacity to execute, deliver and perform
its obligations under this Agreement and (b) this Agreement has been duly and
validly executed and delivered by such Party and constitutes a valid and binding
obligation of such Party, enforceable against such Party in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws affecting creditors generally and by the
availability of equitable remedies.

 

Section 2.02 Further Assurances. The Company and the Seller shall execute such
documents and other instruments and take such further actions as may be
reasonably necessary or desirable to carry out the provisions of this Agreement
and to consummate the transactions contemplated hereby.

 

Section 2.03 Disclosure of Transactions and Other Material Information. The
Company shall, on or before 8:30 a.m., New York City time, on the first Business
Day after the date of this Agreement, issue a press release or file a Current
Report on Form 8-K with the Securities and Exchange Commission disclosing the
purchase of the Subject Notes pursuant to this Agreement and similar agreements
with other holders of the Notes. From and after the earlier of the issuance of
the press release and the filing of the Current Report on Form 8-K with the
Securities and Exchange Commission, the Company acknowledges and agrees that the
Seller shall not be in possession of any material, nonpublic information
received from the Company, any of its subsidiaries or any of their respective
officers, directors, employees or agents.

 

Article III.

MISCELLANEOUS

 

Section 3.01 Successors and Assigns. This Agreement and all the provisions
hereof shall be binding upon and shall inure to the benefit of the Parties and
their respective successors and permitted assigns and no Party shall assign this
Agreement or any of its interests, rights or obligations hereunder to any other
person or entity without the prior written consent of the other Party. The Agent
is an express third party beneficiary of Section 1.06.

 

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Section 3.02 Amendment. No provision of this Agreement may be waived or amended
except in a written instrument signed, by the Party against whom enforcement of
any such waiver or amendment is sought.

 

Section 3.03 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the
application of the substantive law of another jurisdiction. The parties submit
to the exclusive jurisdiction of the state and federal courts located in New
York County, New York for any action , dispute or proceeding arising out of this
Agreement. This Agreement shall not be interpreted or construed with any
presumption against the Party causing this Agreement to be drafted.

 

Section 3.04 Entire Agreement. Section 3.05 This Agreement constitutes the final
agreement between the Parties and supersedes all prior oral or written
agreements or policies relating to the subject matter of this Agreement.

 

Section 3.06 Headings. The article, section and subsection headings in this
Agreement are for convenience only and shall not constitute a part of this
Agreement for any other purpose and shall not be deemed to limit or affect any
of the provisions hereof.

 

Section 3.07 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and shall become effective when counterparts have been signed by each
Party and delivered to the other Party, it being understood that all Parties
need not sign the same counterpart.

 

 

[Signature Page Follows]

 

 

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date
first written above.

 

  [  SELLER  ]               By:       Name:     Title:                    
ELEPHANT TALK COMMUNICATIONS CORP.               By:       Name:     Title: