REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this "Agreement"), is made and entered into
as of March 11, 2014, by and among Net Talk.com, Inc., a Delaware corporation
(the "Company"), and Telestrata LLC, a Colorado limited liability company
("Investor").

 

WHEREAS, the Company and the Investor are parties to a Restricted Stock and
Warrant Purchase Agreement, dated as of the date hereof (the "Purchase
Agreement"), pursuant to which the Investor is purchasing 19,677,261 shares of
Common Stock (as defined below) of the Company, and a Warrant for a number of
shares of Common Stock of the Company equal to twenty percent (20%) of the
issued and outstanding shares of Common Stock on the date such Warrant is
exercised; and

 

WHEREAS, in connection with the consummation of the transactions contemplated by
the Purchase Agreement, and pursuant to the terms of the Purchase Agreement, the
parties desire to enter into this Agreement in order to grant certain
registration rights to the Investor as set forth below.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual and dependent
covenants hereinafter set forth, the parties agree as follows:

 

1.          Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:

 

"Affiliate" of a Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. The term "control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.

 

"Agreement" has the meaning set forth in the preamble.

 

"Board" means the board of directors of the Company (and any successor governing
body of the Company or any successor of the Company).

 

"Commission" means the Securities and Exchange Commission or any other federal
agency administering the Securities Act and the Exchange Act at the time.

 

"Common Stock" means the common stock, par value $0.001 per share, of the
Company and any other common equity securities issued by the Company, and any
other shares of stock issued or issuable with respect thereto (whether by way of
a stock dividend or stock split or in exchange for or upon conversion of such
shares or otherwise in connection with a combination of shares, distribution,
recapitalization, merger, consolidation or other corporate reorganization).

 

 

 

  

"Company" has the meaning set forth in the preamble and includes the Company's
successors by merger, acquisition, reorganization or otherwise.

 

"Demand Registration" has the meaning set forth in Section 2(b).

 

“Exercise Shares” means the shares of the Company’s Common Stock issuable upon
exercise of the Warrant.

 

"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
successor federal statute, and the rules and regulations thereunder, which shall
be in effect from time to time.

 

"Governmental Authority" means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of law), or any arbitrator, court or tribunal of competent
jurisdiction.

 

"Investor" has the meaning set forth in the preamble.

 

"Long Form Registration" has the meaning set forth in Section 2(a).

 

"Person" means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.

 

"Piggyback Registration" has the meaning set forth in Section 3(a).

 

"Prospectus" means the prospectus or prospectuses included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus or prospectuses.

 

"Purchase Agreement" has the meaning set forth in the recitals.

  

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"Registrable Securities" means (a) any shares of Common Stock held by the
Investor or issuable upon conversion, exercise or exchange of any securities
owned by the Investor at any time, and (b) any shares of Common Stock issued or
issuable with respect to any shares described in subsection (a) above by way of
a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization (it being
understood that for purposes of this Agreement, a Person shall be deemed to be a
holder of Registrable Securities whenever such Person has the right to then
acquire or obtain from the Company any Registrable Securities, whether or not
such acquisition has actually been effected). As to any particular Registrable
Securities, such securities shall cease to be Registrable Securities when (i) a
Registration Statement covering such securities has been declared effective by
the Commission and such securities have been disposed of pursuant to such
effective Registration Statement, (ii) such securities are sold under
circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, (iii) such
securities are otherwise transferred and such securities may be resold without
subsequent registration under the Securities Act, or (iv) such securities shall
have ceased to be outstanding.]

 

"Registration Statement" means any registration statement of the Company which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all materials incorporated by reference in such Registration Statement.

 

"Rule 144" means Rule 144 promulgated under the Securities Act or any successor
rule thereto or any complementary rule thereto (such as Rule 144A).

 

"Securities Act" means the Securities Act of 1933, as amended, or any successor
federal statute, and the rules and regulations thereunder, which shall be in
effect from time to time.

 

"Selling Expenses" means all underwriting discounts, selling commissions and
stock transfer taxes applicable to the sale of Registrable Securities, and fees
and disbursements of counsel for any holder of Registrable Securities, except
for the reasonable fees and disbursements of counsel for the holders of
Registrable Securities required to be paid by the Company pursuant to Section 6.

 

"Short-Form Registrations" has the meaning set forth in Section 2(b).

 

“Warrant” has the meaning set forth in the recitals.

 

2.          Demand Registration.

 

(a)          At any time after 18 months after the date of this Agreement,
holders of a majority of the Registrable Securities then outstanding may request
registration under the Securities Act of all or any portion of their Registrable
Securities on Form S-1 or any successor form thereto (each a "Long-Form
Registration"). Each request for a Long-Form Registration shall specify the
approximate number of Registrable Securities required to be registered. Upon
receipt of such request, the Company shall promptly (but in no event later than
ten (10) days following receipt thereof) deliver notice of such request to all
other holders of Registrable Securities who shall then have ten (10) days from
the date such notice is given to notify the Company in writing of their desire
to be included in such registration. The Company shall cause a Registration
Statement on Form S-1 (or any successor form) to be filed within forty-five days
after the date on which the initial request is given and shall use its best
efforts to cause such Registration Statement to be declared effective by the
Commission as soon as practicable thereafter. The Company shall not be required
to effect a Long-Form Registration more than three times for the holders of
Registrable Securities as a group; provided, that a Registration Statement shall
not count as a Long-Form Registration requested under Section 2(a) unless and
until it has become effective and the holders requesting such registration are
able to register and sell at least 90% of the Registrable Securities requested
to be included in such registration.

 

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(b)          The Company shall use its best efforts to qualify and remain
qualified to register securities under the Securities Act pursuant to a
Registration Statement on Form S-3 or any successor form thereto. At such time
as the Company shall have qualified for the use of a Registration Statement on
Form S-3, the holders of Registrable Securities shall have the right to request
an unlimited number of registrations of their Registrable Securities on Form S-3
or any similar short-form registration (each a "Short-Form Registration" and,
together with each Long-Form Registration, a "Demand Registration"). Each
request for a Short-Form Registration shall specify the approximate number of
Registrable Securities requested to be registered. Upon receipt of any such
request, the Company shall promptly (but in no event later than ten days
following receipt thereof) deliver notice of such request to all other holders
of Registrable Securities who shall then have ten days from the date such notice
is given to notify the Company in writing of their desire to be included in such
registration. The Company shall cause a Registration Statement on Form S-3 (or
any successor form) to be filed within 30 days after the date on which the
initial request is given and shall use its best efforts to cause such
Registration Statement to be declared effective by the Commission as soon as
practicable thereafter.

 

(c)          The Company shall not be obligated to effect any Long Form
Registration within 90 days after the effective date of a previous Long-Form
Registration or a previous Piggyback Registration in which holders of
Registrable Securities were permitted to register, and actually sold, all of the
shares of Registrable Securities requested to be included therein. The Company
may postpone for up to 45 days the filing or effectiveness of a Registration
Statement for a Demand Registration if the Company's Board determines in its
reasonable good faith judgment that such Demand Registration would (i)
materially interfere with a significant acquisition, corporate organization or
other similar transaction involving the Company; (ii) require premature
disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential; or (iii) render the Company unable to
comply with requirements under the Securities Act or Exchange Act; provided,
that in such event the holders of a majority of the Registrable Securities
initiating such Demand Registration shall be entitled to withdraw such request
and, if such request is withdrawn, such Demand Registration shall not count as
one of the permitted Demand Registrations hereunder and the Company shall pay
all registration expenses in connection with such registration. The Company may
delay a Demand Registration hereunder only once in any period of twelve
consecutive months.

 

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(d)          If the holders of the Registrable Securities initially requesting a
Demand Registration elect to distribute the Registrable Securities covered by
their request in an underwritten offering, they shall so advise the Company as a
part of their request made pursuant to Section 2(a) or Section 2(b), and the
Company shall include such information in its notice to the other holders of
Registrable Securities. The holders of a majority of the Registrable Securities
initially requesting the Demand Registration shall select the investment banking
firm or firms to act as the managing underwriter or underwriters in connection
with such offering.

 

(e)          The Company shall not include in any Demand Registration any
securities which are not Registrable Securities without the prior written
consent of the holders of a majority of the Registrable Securities initially
requesting such registration, which consent shall not be unreasonably withheld
or delayed. If a Demand Registration involves an underwritten offering and the
managing underwriter of the requested Demand Registration advises the Company
and the holders of Registrable Securities in writing that in its opinion the
number of shares of Common Stock proposed to be included in the Demand
Registration, including all Registrable Securities and all other shares of
Common Stock proposed to be included in such underwritten offering, exceeds the
number of shares of Common Stock which can be sold in such underwritten offering
and/or the number of shares of Common Stock proposed to be included in such
registration would adversely affect the price per share of the Registrable
Securities proposed to be sold in such underwritten offering, the Company shall
include in such Demand Registration (i) first, the number of shares of Common
Stock that the holders of Registrable Securities propose to sell, and (ii)
second, the number of shares of Common Stock proposed to be included therein by
any other Persons (including shares of Common Stock to be sold for the account
of the Company and/or other holders of Common Stock) allocated among such
Persons in such manner as they may agree. If the managing underwriter determines
that less than all of the Registrable Securities proposed to be sold can be
included in such offering, then the Registrable Securities that are included in
such offering shall be allocated pro rata among the respective holders thereof
on the basis of the number of Registrable Securities owned by each such holder.

 

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3.          Piggyback Registration.

 

(a)          Whenever the Company proposes to register any shares of its Common
Stock under the Securities Act (other than a registration effected solely to
implement an employee benefit plan or a transaction to which Rule 145 of the
Securities Act is applicable, or a Registration Statement on Form S-4, S-8 or
any successor form thereto or another form not available for registering the
Registrable Securities for sale to the public), whether for its own account or
for the account of one or more stockholders of the Company and the form of
Registration Statement to be used may be used for any registration of
Registrable Securities (a "Piggyback Registration"), the Company shall give
prompt written notice (in any event no later than thirty (30) days prior to the
filing of such Registration Statement) to the holders of Registrable Securities
of its intention to effect such a registration and, subject to Section 3(b) and
Section 3(c), shall include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion from
the holders of Registrable Securities within fifteen (15) days after the
Company's notice has been given to each such holder. A Piggyback Registration
shall not be considered a Demand Registration for purposes of Section 2 of this
Agreement.

   

(b)          If a Piggyback Registration is initiated as a primary underwritten
offering on behalf of the Company and the managing underwriter advises the
Company and the holders of Registrable Securities (if any holders of Registrable
Securities have elected to include Registrable Securities in such Piggyback
Registration) in writing that in its opinion the number of shares of Common
Stock proposed to be included in such registration, including all Registrable
Securities and all other shares of Common Stock proposed to be included in such
underwritten offering, exceeds the number of shares of Common Stock which can be
sold in such offering and/or that the number of shares of Common Stock proposed
to be included in any such registration would adversely affect the price per
share of the Common Stock to be sold in such offering, the Company shall include
in such registration (i) first, the number of shares of Common Stock that the
Company proposes to sell; (ii) second, the number of shares of Common Stock
requested to be included therein by holders of Registrable Securities, allocated
pro rata among all such holders on the basis of the number of Registrable
Securities owned by each such holder or in such manner as they may otherwise
agree; and (iii) third, the number of shares of Common Stock requested to be
included therein by holders of Common Stock (other than holders of Registrable
Securities), allocated among such holders in such manner as they may agree;
provided, that in any event the holders of Registrable Securities shall be
entitled to register at least 30% of the securities to be included in any such
registration.

 

(c)          If a Piggyback Registration is initiated as an underwritten
offering on behalf of a holder of Common Stock other than Registrable
Securities, and the managing underwriter advises the Company in writing that in
its opinion the number of shares of Common Stock proposed to be included in such
registration, including all Registrable Securities and all other shares of
Common Stock proposed to be included in such underwritten offering, exceeds the
number of shares of Common Stock which can be sold in such offering and/or that
the number of shares of Common Stock proposed to be included in any such
registration would adversely affect the price per share of the Common Stock to
be sold in such offering, the Company shall include in such registration (i)
first, the number of shares of Common Stock requested to be included therein by
the holder(s) requesting such registration and by the holders of Registrable
Securities, allocated pro rata among such holders on the basis of the number of
shares of Common Stock (on a fully diluted, as converted basis) and the number
of Registrable Securities, as applicable, owned by all such holders or in such
manner as they may otherwise agree; and (ii) second, the number of shares of
Common Stock requested to be included therein by other holders of Common Stock,
allocated among such holders in such manner as they may agree.

 

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(d)          If any Piggyback Registration is initiated as a primary
underwritten offering on behalf of the Company, the Company shall select the
investment banking firm or firms to act as the managing underwriter or
underwriters in connection with such offering.

 

4.          Lock-up Agreement. Each holder of Registrable Securities agrees that
in connection with any public offering of the Company's Common Stock or other
equity securities, and upon the request of the managing underwriter in such
offering, such holder shall not, without the prior written consent of such
managing underwriter, during the period commencing on the effective date of such
registration and ending on the date specified by such managing underwriter (such
period not to exceed 90 days), (a) offer, pledge, sell, contract to sell, grant
any option or contract to purchase, purchase any option or contract to sell,
hedge the beneficial ownership of or otherwise dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into,
exercisable for or exchangeable for shares of Common Stock held immediately
before the effectiveness of the registration statement for such offering, or (b)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of such securities,
whether any such transaction described in clause (a) or (b) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing provisions of this Section 4 shall not apply to sales
of Registrable Securities to be included in such offering pursuant to Section
2(a), Section 2(b) or Section 3(a), and shall be applicable to the holders of
Registrable Securities only if all officers and directors of the Company and all
stockholders owning more than 5% of the Company's outstanding Common Stock are
subject to the same restrictions. Each holder of Registrable Securities agrees
to execute and deliver such other agreements as may be reasonably requested by
the Company or the managing underwriter which are consistent with the foregoing
or which are necessary to give further effect thereto. Notwithstanding anything
to the contrary contained in this Section 4, each holder of Registrable
Securities shall be released, pro rata, from any lock-up agreement entered into
pursuant to this Section 4 in the event and to the extent that the managing
underwriter or the Company permit any discretionary waiver or termination of the
restrictions of any lock-up agreement pertaining to any officer, director or
holder of greater than 5% of the outstanding Common Stock.

 

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5.          Registration Procedures. If and whenever the holders of Registrable
Securities request that any Registrable Securities be registered pursuant to the
provisions of this Agreement, the Company shall use its best efforts to effect
the registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof, and pursuant thereto the Company
shall as soon as reasonably practicable:

 

(a)          subject to Section 2(a) and Section 2(b), prepare and file with the
Commission a Registration Statement with respect to such Registrable Securities
and use its best efforts to cause such Registration Statement to become
effective;

 

(b)          prepare and file with the Commission such amendments,
post-effective amendments and supplements to such Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective until all of such Registrable Securities have
been disposed of and to comply with the provisions of the Securities Act with
respect to the disposition of such Registrable Securities in accordance with the
intended methods of disposition set forth in such Registration Statement;

 

(c)          within a reasonable time before filing such Registration Statement,
Prospectus or amendments or supplements thereto, furnish to one counsel selected
by holders of a majority of such Registrable Securities copies of such documents
proposed to be filed, which documents shall be subject to the review, comment
and approval of such counsel;

 

(d)          notify each selling holder of Registrable Securities, promptly
after the Company receives notice thereof, of the time when such Registration
Statement has been declared effective or a supplement to any Prospectus forming
a part of such Registration Statement has been filed;

 

(e)          furnish to each selling holder of Registrable Securities such
number of copies of the Prospectus included in such Registration Statement
(including each preliminary Prospectus) and any supplement thereto (in each case
including all exhibits and documents incorporated by reference therein) and such
other documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;

 

(f)          use its best efforts to register or qualify such Registrable
Securities under such other securities or "blue sky" laws of such jurisdictions
as any selling holder reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such holders to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such holders; provided, that the Company shall not be required to
qualify generally to do business, subject itself to general taxation or consent
to general service of process in any jurisdiction where it would not otherwise
be required to do so but for this Section 5(f);

 

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(g)          notify each selling holder of such Registrable Securities, at any
time when a Prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
Prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such holder, the Company shall
prepare a supplement or amendment to such Prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such Prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;

 

(h)          make available for inspection by any selling holder of Registrable
Securities, any underwriter participating in any disposition pursuant to such
Registration Statement and any attorney, accountant or other agent retained by
any such holder or underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such Inspector
in connection with such Registration Statement;

 

(i)          provide a transfer agent and registrar (which may be the same
entity) for all such Registrable Securities not later than the effective date of
such registration;

 

(j)          use its reasonable best efforts to cause such Registrable
Securities to be listed on each securities exchange on which the Common Stock is
then listed or, if the Common Stock is not then listed, on a national securities
exchange selected by the holders of a majority of such Registrable Securities;

 

(k)          in connection with an underwritten offering, enter into such
customary agreements (including underwriting and lock-up agreements in customary
form) and take all such other customary actions as the holders of such
Registrable Securities or the managing underwriter of such offering reasonably
request in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, making appropriate officers of the
Company available to participate in "road show" and other customary marketing
activities (including one-on-one meetings with prospective purchasers of the
Registrable Securities);

 

(l)          otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission and make available to its
stockholders an earnings statement (in a form that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder) no later than
forty-five (45) days after the end of the 12-month period beginning with the
first day of the Company's first full fiscal quarter after the effective date of
such Registration Statement, which earnings statement shall cover said 12-month
period, and which requirement will be deemed to be satisfied if the Company
timely files complete and accurate information on Forms 10-Q, 10-K and 8-K under
the Exchange Act and otherwise complies with Rule 158 under the Securities Act;
and

 

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(m)          furnish to each selling holder of Registrable Securities and each
underwriter, if any, with (i) a legal opinion of the Company's outside counsel,
dated the effective date of such Registration Statement (and, if such
registration includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), in form and substance as is
customarily given in opinions of the Company's counsel to underwriters in
underwritten public offerings; and (ii) a "comfort" letter signed by the
Company's independent certified public accountants in form and substance as is
customarily given in accountants' letters to underwriters in underwritten public
offerings;

 

(n)          without limiting Section 5(f) above, use its best efforts to cause
such Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Company to enable the holders of such Registrable
Securities to consummate the disposition of such Registrable Securities in
accordance with their intended method of distribution thereof;

 

(o)          notify the holders of Registrable Securities promptly of any
request by the Commission for the amending or supplementing of such Registration
Statement or Prospectus or for additional information;

 

(p)          advise the holders of Registrable Securities, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission suspending the effectiveness of such Registration
Statement or the initiation or threatening of any proceeding for such purpose
and promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal at the earliest possible moment if such stop order
should be issued;

 

(q)          permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
Registration Statement and to require the insertion therein of language,
furnished to the Company in writing, which in the reasonable judgment of such
holder and its counsel should be included;

 

(r)          otherwise use its reasonable best efforts to take all other steps
necessary to effect the registration of such Registrable Securities contemplated
hereby.

 

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6.          Expenses. All expenses (other than Selling Expenses) incurred by the
Company in complying with its obligations pursuant to this Agreement and in
connection with the registration and disposition of Registrable Securities,
including, without limitation, all registration and filing fees, underwriting
expenses (other than fees, commissions or discounts), expenses of any audits
incident to or required by any such registration, fees and expenses of complying
with securities and "blue sky" laws, printing expenses, fees and expenses of the
Company's counsel and accountants and reasonable fees and expenses of one
counsel for the holders of Registrable Securities participating in such
registration as a group (selected by, in the case of a registration under
Section 2(a), the holders of a majority of the Registrable Securities initially
requesting such registration, and, in the case of all other registrations
hereunder, the holders of a majority of the Registrable Securities included in
the registration), shall be paid by the Company. All Selling Expenses relating
to Registrable Securities registered pursuant to this Agreement shall be borne
and paid by the holders of such Registrable Securities, in proportion to the
number of Registrable Securities registered for each such holder.

 

7.          Indemnification.

 

(a)          The Company shall indemnify and hold harmless, to the fullest
extent permitted by law, each holder of Registrable Securities, such holder's
officers, directors, managers, members, partners, stockholders and Affiliates,
each underwriter, broker or any other Person acting on behalf of such holder of
Registrable Securities and each other Person, if any, who controls any of the
foregoing Persons within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against all losses, claims, actions, damages,
liabilities and expenses, joint or several, to which any of the foregoing
Persons may become subject under the Securities Act or otherwise, insofar as
such losses, claims, actions, damages, liabilities or expenses arise out of or
are based upon any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus, preliminary Prospectus,
free writing prospectus (as defined in Rule 405 promulgated under the Securities
Act) or any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation or alleged violation by
the Company of the Securities Act or any other similar federal or state
securities laws or any rule or regulation promulgated thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance; and shall
reimburse such Persons for any legal or other expenses reasonably incurred by
any of them in connection with investigating or defending any such loss, claim,
action, damage or liability, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such holder
expressly for use therein or by such holder's failure to deliver a copy of the
Registration Statement, Prospectus, free-writing prospectus (as defined in Rule
405 promulgated under the Securities Act) or any amendments or supplements
thereto (if the same was required by applicable law to be so delivered) after
the Company has furnished such holder with a sufficient number of copies of the
same prior to any written confirmation of the sale of Registrable Securities.

 

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(b)          In connection with any registration in which a holder of
Registrable Securities is participating, each such holder shall furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such Registration Statement or
Prospectus and, to the extent permitted by law, shall indemnify and hold
harmless, the Company, each director of the Company, each officer of the Company
who shall sign such Registration Statement, each underwriter, broker or other
Person acting on behalf of the holders of Registrable Securities and each Person
who controls any of the foregoing Persons within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act against any losses, claims,
actions, damages, liabilities or expenses resulting from any untrue or alleged
untrue statement of material fact contained in the Registration Statement,
Prospectus, preliminary Prospectus, free writing prospectus (as defined in Rule
405 promulgated under the Securities Act) or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information or affidavit so furnished in writing by such holder; provided, that
the obligation to indemnify shall be several, not joint and several, for each
holder and shall be limited to the net proceeds (after underwriting fees,
commissions or discounts) actually received by such holder from the sale of
Registrable Securities pursuant to such Registration Statement.

 

(c)          Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in this Section 7, such
indemnified party shall, if a claim in respect thereof is made against an
indemnifying party, give written notice to the latter of the commencement of
such action. The failure of any indemnified party to notify an indemnifying
party of any such action shall not (unless such failure shall have a material
adverse effect on the indemnifying party) relieve the indemnifying party from
any liability in respect of such action that it may have to such indemnified
party hereunder. In case any such action is brought against an indemnified
party, the indemnifying party shall be entitled to participate in and to assume
the defense of the claims in any such action that are subject or potentially
subject to indemnification hereunder, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after written notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be responsible for any legal
or other expenses subsequently incurred by the indemnified party in connection
with the defense thereof; provided, that if (i) any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses
available to such indemnified party which are additional to or conflict with
those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
provided hereunder, or (ii) such action seeks an injunction or equitable relief
against any indemnified party or involves actual or alleged criminal activity,
the indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party without such indemnified party's
prior written consent (but, without such consent, shall have the right to
participate therein with counsel of its choice) and such indemnifying party
shall reimburse such indemnified party and any Person controlling such
indemnified party for that portion of the fees and expenses of any counsel
retained by the indemnified party which is reasonably related to the matters
covered by the indemnity provided hereunder. If the indemnifying party is not
entitled to, or elects not to, assume the defense of a claim, it shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim. In such instance, the conflicting indemnified parties
shall have a right to retain one separate counsel, chosen by the holders of a
majority of the Registrable Securities included in the registration, at the
expense of the indemnifying party.

 

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(d)          If the indemnification provided for hereunder is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to
any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such indemnified party as a
result of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such loss, claim, damage, liability or action as
well as any other relevant equitable considerations; provided, that the maximum
amount of liability in respect of such contribution shall be limited, in the
case of each holder of Registrable Securities, to an amount equal to the net
proceeds (after underwriting fees, commissions or discounts) actually received
by such seller from the sale of Registrable Securities effected pursuant to such
registration. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties agree that it would not be just
and equitable if contribution pursuant hereto were determined by pro rata
allocation or by any other method or allocation which does not take account of
the equitable considerations referred to herein. No Person guilty or liable of
fraudulent misrepresentation shall be entitled to contribution from any Person.

 

13

 

 

8.          Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided, that no
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder,
such holder's ownership of its shares of Common Stock to be sold in the offering
and such holder's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in Section 7.

   

9.          Rule 144 Compliance. With a view to making available to the holders
of Registrable Securities the benefits of Rule 144 under the Securities Act and
any other rule or regulation of the Commission that may at any time permit a
holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3 (or any successor form), the Company
shall:

 

(a)          make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the Registration Date;

 

(b)          use best efforts to file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act, at any time after the Company has become subject to such
reporting requirements; and

 

(c)          furnish to any holder so long as the holder owns Registrable
Securities, promptly upon request, a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 under the Securities Act
and of the Securities Act and the Exchange Act, a copy of the most recent annual
or quarterly report of the Company, and such other reports and documents so
filed or furnished by the Company as such holder may reasonably request in
connection with the sale of Registrable Securities without registration.

 

10.         Preservation of Rights. The Company shall not (a) grant any
registration rights to third parties which are more favorable than or
inconsistent with the rights granted hereunder, or (b) enter into any agreement,
take any action, or permit any change to occur, with respect to its securities
that violates or subordinates the rights expressly granted to the holders of
Registrable Securities in this Agreement.

 

11.         Termination. This Agreement shall terminate and be of no further
force or effect when there shall no longer be any Registrable Securities
outstanding; provided, that the provisions of Section 6 and Section 7 shall
survive any such termination.

 

14

 

 

12.         Notices. All notices, requests, consents, claims, demands, waivers
and other communications hereunder shall be in writing and shall be deemed to
have been given (a) when delivered by hand (with written confirmation of
receipt); (b) when received by the addressee if sent by a nationally recognized
overnight courier (receipt requested); (c) on the date sent by facsimile or
e-mail of a PDF document (with confirmation of transmission) if sent during
normal business hours of the recipient, and on the next Business Day if sent
after normal business hours of the recipient or (d) on the third day after the
date mailed, by certified or registered mail, return receipt requested, postage
prepaid. Such communications must be sent to the respective parties at the
addresses indicated below (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 12).

  

If to the Company:

1080 N.W. 163rd Drive
North Miami, Florida 33169

 

E-mail: takis@nettalk.com

 

Attention: Chairman

 

If to any Investor, to such Investor's address as set forth on the signature
page hereto.

 

13.         Entire Agreement. This Agreement, together with the Purchase
Agreement and any related exhibits and schedules thereto, constitutes the sole
and entire agreement of the parties to this Agreement with respect to the
subject matter contained herein, and supersedes all prior and contemporaneous
understandings and agreements, both written and oral, with respect to such
subject matter. Notwithstanding the foregoing, in the event of any conflict
between the terms and provisions of this Agreement and those of the Purchase
Agreement, the terms and conditions of this Agreement shall control.

 

14.         Successor and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Each Investor may assign its rights hereunder to any
purchaser or transferee of Registrable Securities; provided, that such purchaser
or transferee shall, as a condition to the effectiveness of such assignment, be
required to execute a counterpart to this Agreement agreeing to be treated as an
Investor whereupon such purchaser or transferee shall have the benefits of, and
shall be subject to the restrictions contained in, this Agreement as if such
purchaser or transferee was originally included in the definition of an Investor
herein and had originally been a party hereto.

 

15

 

 

15.         No Third-Party Beneficiaries. This Agreement is for the sole benefit
of the parties hereto and their respective successors and permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person any legal or equitable right, benefit or remedy of any nature
whatsoever, under or by reason of this Agreement.

 

16.         Headings. The headings in this Agreement are for reference only and
shall not affect the interpretation of this Agreement.

 

17.         Amendment, Modification and Waiver. The provisions of this Agreement
may only be amended, modified, supplemented or waived with the prior written
consent of the Company and the holders of a majority of the Registrable
Securities. No waiver by any party or parties shall operate or be construed as a
waiver in respect of any failure, breach or default not expressly identified by
such written waiver, whether of a similar or different character, and whether
occurring before or after that waiver. Except as otherwise set forth in this
Agreement, no failure to exercise, or delay in exercising, any right, remedy,
power or privilege arising from this Agreement shall operate or be construed as
a waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege.

  

18.         Severability. If any term or provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction. Upon such determination that any term or other provision is
invalid, illegal or unenforceable, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

19.         Remedies. Each holder of Registrable Securities, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, shall be entitled to specific performance of its rights under this
Agreement. The Company acknowledges that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and the Company hereby agrees to waive the defense in any
action for specific performance that a remedy at law would be adequate.

 

20.         Governing Law; Submission to Jurisdiction. 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 choice or conflict of law provision or
rule (whether of the State of New York or any other jurisdiction). Any legal
suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby may be instituted in the federal courts of the
United States or the courts of the State of Florida in each case located in the
city of Miami and County of Miami-Dade, and each party irrevocably submits to
the exclusive jurisdiction of such courts in any such suit, action or
proceeding. Service of process, summons, notice or other document by mail to
such party's address set forth herein shall be effective service of process for
any suit, action or other proceeding brought in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any suit, action or any proceeding in such courts and irrevocably waive and
agree not to plead or claim in any such court that any such suit, action or
proceeding brought in any such court has been brought in an inconvenient forum.

 

16

 

 

21.         Waiver of Jury Trial. Each party acknowledges and agrees that any
controversy which may arise under this Agreement is likely to involve
complicated and difficult issues and, therefore, each such party irrevocably and
unconditionally waives any right it may have to a trial by jury in respect of
any legal action arising out of or relating to this Agreement or the
transactions contemplated hereby. Each party to this Agreement certifies and
acknowledges that (a) no representative of any other party has represented,
expressly or otherwise, that such other party would not seek to enforce the
foregoing waiver in the event of a legal action, (b) such party has considered
the implications of this waiver, (c) such party makes this waiver voluntarily,
and (d) such party has been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Section 21.

   

22.         Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall be deemed
to be one and the same agreement. A signed copy of this Agreement delivered by
facsimile, e-mail or other means of electronic transmission shall be deemed to
have the same legal effect as delivery of an original signed copy of this
Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

17

 

  

IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights
Agreement on the date first written above.

 

  Net Talk.com, Inc.   By /s/Anastasios Kyriakides       Name: ANASTASIOS
KYRIAKIDES   Title: CEO

 

  Telestrata LLC   By /s/Nadir Aljazrawi       Name: NADIR ALJAZRAWI   Title:
PRESIDENT   Address: 2060 Broadway, Suite 200     Boulder, Colorado 80302

 

[Signature Page NTLK Registration Rights Agreement]