REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of March 30, 2012 by
and among Elephant Talk Communications, Corp., a Delaware corporation, with
headquarters located at 19103 Centre Rose Boulevard, Lutz, FL 33558 (the
“Company”), and the investors listed on the Schedule of Purchasers attached
hereto (each, a “Purchaser” and collectively, the “Purchasers”).

 

WHEREAS:

 

A.           In connection with the Securities Purchase Agreement by and among
the parties hereto of even date herewith (the “Securities Purchase Agreement”),
the Company has agreed, upon the terms and subject to the conditions of the
Securities Purchase Agreement, to issue and sell to each Purchaser 8% Senior
Secured Convertible Notes (the “Notes”).

 

B.           In accordance with the terms of the Securities Purchase Agreement,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the “1933 Act”), and applicable
state securities laws.

 

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and each of the
Purchasers hereby agree as follows:

 

1.          Definitions.

 

Capitalized terms used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement. As used in
this Agreement, the following terms shall have the following meanings:

 

(a)          “Additional Effective Date” means the date the Additional
Registration Statement is declared effective by the SEC.

 

(b)          “Additional Effectiveness Deadline” means the date which is fifteen
(15) calendar days after the earlier of the Additional Filing Date and the
Additional Filing Deadline (as defined below) or in the event that any such
Additional Registration Statement is subject to a full review by the SEC,
forty-five (45) calendar days after the earlier of the Additional Filing Date
and the Additional Filing Deadline.

 

(c)          “Additional Filing Date” means the date on which the Additional
Registration Statement is filed with the SEC.

 

(d)          “Additional Registrable Securities” means (i) any capital stock of
the Company issued or issuable with respect to the Conversion Shares or the
Notes, as applicable, as a result of any stock split, stock dividend,
recapitalization, exchange, anti-dilution adjustment to the Notes, or similar
event or otherwise, without regard to any limitations on the issuance of Common
Shares under the Notes.

 

 

 

 

(e)          “Additional Registration Statement” means a registration statement
or registration statements of the Company filed under the 1933 Act covering any
Additional Registrable Securities or a registration statement required to be
filed pursuant to Section 2(b) hereof.

 

(f)          “Business Day” means any day other than Saturday, Sunday or any
other day on which commercial banks in the City of New York are authorized or
required by law to remain closed.

 

(g)          “Closing Date” shall have the meaning set forth in the Securities
Purchase Agreement.

 

(h)          “Common Shares” means the shares of common stock, no par value per
share, of the Company.

 

(i)          “Conversion Shares” any and all Common Shares issued or issuable
pursuant to the Notes, including, without limitation, upon conversion thereof or
in connection with any Stock Payment Amount (as defined in the Notes).

 

(j)          “Effective Date” means the Initial Effective Date and any
Additional Effective Date, as applicable.

 

(k)          “Effectiveness Deadline” means the Initial Effectiveness Deadline
and any Additional Effectiveness Deadline, as applicable.

 

(l)          “Initial Effective Date” means the date that the Initial
Registration Statement has been declared effective by the SEC.

 

(m)          “Initial Effectiveness Deadline” means the date that is ninety (90)
calendar days after the Closing Date or, in the event that the Initial
Registration Statement is subject to a full review by the SEC, the date that is
one hundred twenty (120) calendar days after the Closing Date.

 

(n)          “Initial Registrable Securities” means (i) the Conversion Shares or
other Common Shares issued or issuable under the Notes and (ii) any capital
stock of the Company issued or issuable, with respect to the Conversion Shares
or the Notes as a result of any stock split, stock dividend, recapitalization,
exchange, anti-dilution adjustment to the Notes, or similar event or otherwise,
without regard to any limitations on the issuance of Common Shares under the
Notes.

 

(o)          “Initial Registration Statement” means a registration statement or
registration statements of the Company filed under the 1933 Act covering the
Initial Registrable Securities.

 

(p)          “Investor” means a Purchaser or any transferee or assignee thereof
to whom a Purchaser assigns its rights under this Agreement and who agrees to
become bound by the provisions of this Agreement in accordance with Section 9
and any transferee or assignee thereof to whom a transferee or assignee assigns
its rights under this Agreement and who agrees to become bound by the provisions
of this Agreement in accordance with Section 9.

 

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(q)          “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.

 

(r)          “register,” “registered,” and “registration” refer to a
registration effected by preparing and filing one or more Registration
Statements (as defined below) in compliance with the 1933 Act and pursuant to
Rule 415, and the declaration or ordering of effectiveness of such Registration
Statement(s) by the SEC.

 

(s)          “Registrable Securities” means the Initial Registrable Securities,
and the Additional Registrable Securities. Registrable Securities shall cease to
be Registrable Securities upon the earlier of a sale of Registrable Securities
pursuant to an effective Registration Statement or the exemption provided by
Rule 144 under the 1933 Act.

 

(t)          “Registration Statement” means the Initial Registration Statement
and the Additional Registration Statement, as applicable.

 

(u)          “Required Holders” means the holders of at least two-thirds of the
Registrable Securities.

 

(v)          “Required Registration Amount” means 225% of the maximum number of
Conversion Shares issued and issuable upon conversion of the Notes as of the
Trading Day immediately preceding the applicable date of determination, without
regard to any limitations on the issuance of Common Shares under the Notes. The
calculation of the Required Registration Amount shall assume that the Notes are
then convertible, for Common Shares at the then prevailing Conversion Price (as
defined in the Notes).

 

(w)          “Rule 415” means Rule 415 promulgated under the 1933 Act or any
successor rule providing for offering securities on a continuous or delayed
basis.

 

(x)          “SEC” means the United States Securities and Exchange Commission.

 

(y)          “Trading Day” means any day on which the Common Shares are traded
on the Principal Market (as defined in the Securities Purchase Agreement), or,
if the Principal Market is not the principal trading market for the Common
Shares, then on the principal securities exchange or securities market on which
the Common Shares are then traded; provided that “Trading Day” shall not include
any day on which the Common Shares are scheduled to trade on such exchange or
market for less than 4.5 hours or any day that the Common Shares are suspended
from trading during the final hour of trading on such exchange or market (or if
such exchange or market does not designate in advance the closing time of
trading on such exchange or market, then during the hour ending at 4:00:00 p.m.,
New York time).

 

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2.          Registration.

 

(a)          Initial Mandatory Registration. The Company shall prepare and file
with the SEC the Initial Registration Statement on Form S-3 covering the resale
of all of the Initial Registrable Securities as soon as reasonably practicable
after the Closing Date, but in no event more than thirty (30) days after the
Closing Date (the “Initial Filing Deadline”), and shall cause such Initial
Registration Statement to be declared effective by the SEC as soon as reasonably
practicable thereafter, but in no event later than the Initial Effectiveness
Deadline. In the event that Form S-3 is unavailable for such a registration, the
Company shall use such other form as is available for such a registration on
another appropriate form reasonably acceptable to the Required Holders, subject
to the provisions of Section 2(e). The Initial Registration Statement prepared
pursuant hereto shall register for resale at least the number of Common Shares
equal to the Required Registration Amount determined as of the date the Initial
Registration Statement is initially filed with the SEC. The Initial Registration
Statement shall contain (except if otherwise directed by the Required Holders)
the “Plan of Distribution” and the “Selling Shareholders” sections in
substantially the forms attached hereto as Exhibit B, unless otherwise required
by the SEC. The Company shall use reasonable best efforts to file with the SEC
in accordance with Rule 424 under the 1933 Act the final prospectus to be used
in connection with sales pursuant to such Initial Registration Statement by 9:30
am on the Business Day following the Effective Date, but in any case no later
than the deadline required by Rule 424.

 

(b)          Additional Mandatory Registrations. If during the Registration
Period (as defined below) the number of Common Shares then registered in a
Registration Statement is less than the Required Registration Amount or is
insufficient to cover an Investor’s allocated portion of the Registrable
Securities pursuant to Section 2(c) below, then the Company shall prepare, and,
as soon as reasonably practicable but in no event later than the thirtieth
(30th) calendar day after the day that the Company first knows, or should have
known, that an Additional Registration Statement is required hereunder (the
“Additional Filing Deadline”), file with the SEC an Additional Registration
Statement on Form S-3 covering at least the Required Registration Amount as of
the Trading Day immediately preceding the date of the filing of such amendment.
In the event that Form S-3 is unavailable for such a registration, the Company
shall use such other form as is available for such a registration on another
appropriate form reasonably acceptable to the Required Holders, subject to the
provisions of Section 2(e). Furthermore, the Company shall prepare, and, as soon
as practicable but in no event later than the Additional Filing Deadline, file
with the SEC an Additional Registration Statement on Form S-3 covering the
resale of all Additional Registrable Securities not previously registered on a
Registration Statement hereunder. Each Additional Registration Statement shall
contain (except if otherwise directed by the Required Holders) the “Plan of
Distribution” and the “Selling Shareholders” sections in substantially the forms
attached hereto as Exhibit B section, unless otherwise required by the SEC. The
Company shall cause each Additional Registration Statement declared effective by
the SEC as soon as reasonably practicable, but in no event later than the
Additional Effectiveness Deadline. The Company shall use reasonable best efforts
to file with the SEC in accordance with Rule 424 under the 1933 Act the final
prospectus to be used in connection with sales pursuant to such Additional
Registration Statement by 9:30 am on the Business Day following the Effective
Date, but in any case no later than the deadline required by Rule 424.

 

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(c)          Allocation of Registrable Securities. The initial number of
Registrable Securities included in any Registration Statement and any increase
or decrease in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time the Registration Statement covering
such initial number of Registrable Securities or increase or decrease thereof is
declared effective by the SEC. In the event that an Investor sells or otherwise
transfers any of such Investor’s Registrable Securities, each transferee that
becomes an Investor shall be allocated a pro rata portion of the then remaining
number of Registrable Securities included in such Registration Statement for
such transferor. Any Common Shares included in a Registration Statement and
which remain allocated to any Person which ceases to hold any Registrable
Securities covered by such Registration Statement shall be allocated to the
remaining Investors, pro rata based on the number of Registrable Securities then
held by such Investors which are covered by such Registration Statement. The
Company may not include securities other than Registrable Securities on a
Registration Statement without the consent of the Required Holders.

 

(d)          Legal Counsel. Subject to Section 5 hereof, the Required Holders
shall have the right to select one legal counsel to review and oversee any
registration pursuant to this Section 2 (“Legal Counsel”), which shall be
Kleinberg, Kaplan, Wolff & Cohen, P.C. or such other counsel as thereafter
designated by the Required Holders. The Company and Legal Counsel shall
reasonably cooperate with each other in performing the Company’s obligations
under this Agreement.

 

(e)          Ineligibility for Form S-3. In the event that Form S-3 is not
available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable
Securities on another appropriate form reasonably acceptable to the Required
Holders and (ii) undertake to register the Registrable Securities on Form S-3 as
soon as such form is available, provided that the Company shall use its
reasonable best efforts to maintain the effectiveness of the Registration
Statement then in effect until such time as a Registration Statement on Form S-3
covering the Registrable Securities has been declared effective by the SEC.

 

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(f)          Effect of Failure to File and Obtain and Maintain Effectiveness of
Registration Statement. If (i) a Registration Statement covering all of the
Registrable Securities required to be covered thereby and required to be filed
by the Company pursuant to this Agreement is (A) not filed with the SEC on or
before the applicable Initial Filing Deadline or Additional Filing Deadline (a
“Filing Failure”) or (B) not declared effective by the SEC on or before the
applicable Effectiveness Deadline, (an “Effectiveness Failure”) or (ii) for five
(5) consecutive calendar days after the applicable Effective Date sales of all
of the Registrable Securities required to be included on such Registration
Statement cannot be made (other than during an Allowable Grace Period (as
defined in Section 3(q)) pursuant to such Registration Statement or otherwise
(including, without limitation, because of the suspension of trading or any
other limitation imposed by an Eligible Market, a failure to keep such
Registration Statement effective, a failure to disclose such information as is
necessary for sales to be made pursuant to such Registration Statement, a
failure to register a sufficient number of Common Shares or a failure to
maintain the listing or trading of the Common Shares on an Eligible Market (as
defined in the Note) (a “Maintenance Failure”) then, as partial relief for the
damages to any holder by reason of any such delay in or reduction of its ability
to sell the underlying Common Shares (which remedy shall not be exclusive of any
other remedies available at law or in equity, including, without limitation,
specific performance), the Company shall pay to each holder of Registrable
Securities relating to such Registration Statement: an amount in cash equal to
one percent (1%) of the Purchase Price (as such term is defined in the
Securities Purchase Agreement) of such Investor’s Registrable Securities
required to be included in such Registration Statement, but not so included, on
each of the following dates: (i) the day of a Filing Failure, (ii) the day of an
Effectiveness Failure and (iii) the initial day of a Maintenance Failure; (iv)
on the thirtieth day after the date of a Filing Failure and every thirtieth day
thereafter (pro rated for periods totaling less than thirty days) until such
Filing Failure is cured; (v) on the thirtieth day after the date of an
Effectiveness Failure and every thirtieth day thereafter (pro rated for periods
totaling less than thirty days) until such Effectiveness Failure is cured; and
(vi) on the thirtieth day after the date of a Maintenance Failure and every
thirtieth day thereafter (pro rated for periods totaling less than thirty days)
until such Maintenance Failure is cured. The payments to which a holder shall be
entitled pursuant to this Section 2(f) are referred to herein as “Registration
Delay Payments.” Registration Delay Payments shall be paid within three (3)
Business Days of the earlier of (I) the dates set forth above and (II) the third
Business Day after the event or failure giving rise to the Registration Delay
Payments is cured. In the event the Company fails to make Registration Delay
Payments in a timely manner, such Registration Delay Payments shall bear
interest at the rate of three percent (3%) per month (prorated for partial
months) until paid in full.

 

3.          Related Obligations.

 

At such time as the Company is obligated to file a Registration Statement with
the SEC pursuant to Section 2(a), 2(b) or 2(e), the Company will use its
reasonable best efforts to effect the registration of the Registrable Securities
in accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations:

 

(a)          The Company shall prepare and file with the SEC a Registration
Statement with respect to the Registrable Securities and cause such Registration
Statement relating to the Registrable Securities to become effective as soon as
reasonably practicable after such filing (but in no event later than the
Effectiveness Deadline). The Company shall use its best efforts to keep each
Registration Statement effective pursuant to Rule 415 at all times until the
date on which the Investors shall have sold all of the Registrable Securities
covered by such Registration Statement (the “Registration Period”). The Company
shall ensure that each Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were made) not
misleading. The Company shall submit to the SEC, within three (3) Business Days
after the later of the date that (i) the Company learns that no review of a
particular Registration Statement will be made by the staff of the SEC or that
the staff has no further comments on a particular Registration Statement, as the
case may be, and (ii) the approval of Legal Counsel pursuant to Section 3(c)
(which approval is promptly sought), a request for acceleration of effectiveness
of such Registration Statement to a time and date not later than two (2)
Business Days after the submission of such request. The Company shall respond in
writing to comments made by the SEC in respect of a Registration Statement as
promptly as reasonably practicable after the receipt of comments by or notice
from the SEC that an amendment is required in order for a Registration Statement
to be declared effective.

 

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(b)          The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep such Registration Statement
effective at all times during the Registration Period, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of
all Registrable Securities of the Company covered by such Registration Statement
until such time as all of such Registrable Securities shall have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof as set forth in such Registration Statement. In the case of
amendments and supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this Section 3(b)) by
reason of the Company filing a report on Form 10-K, Form 10-Q or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
“1934 Act”), the Company shall have incorporated such report by reference into
such Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement such
Registration Statement.

 

(c)          The Company shall (A) permit Legal Counsel to review and comment
upon (i) a Registration Statement at least five (5) Business Days prior to its
filing with the SEC and (ii) all amendments and supplements to all Registration
Statements (except for Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and any similar or successor reports) within a
reasonable number of days prior to their filing with the SEC, and (B) not file
any Registration Statement or amendment or supplement thereto in a form to which
Legal Counsel reasonably objects. The Company shall not submit a request for
acceleration of the effectiveness of a Registration Statement or any amendment
or supplement thereto without the prior approval of Legal Counsel, which consent
shall not be unreasonably withheld. The Company shall furnish to Legal Counsel,
without charge, (i) copies of any correspondence from the SEC or the staff of
the SEC to the Company or its representatives relating to any Registration
Statement, (ii) unless the following are filed with the SEC through EDGAR and
are available to the public through the EDGAR system promptly after the same is
prepared and filed with the SEC, one copy of any Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, and
all exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel in performing the Company’s obligations pursuant to this Section
3.

 

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(d)          The Company shall furnish to each Investor whose Registrable
Securities are included in any Registration Statement, without charge, (i)
promptly after the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, all exhibits and each preliminary prospectus, (ii)
upon the effectiveness of any Registration Statement, ten (10) copies of the
prospectus included in such Registration Statement and all amendments and
supplements thereto (or such other number of copies as such Investor may
reasonably request) and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

 

(e)          The Company shall (i) register and qualify, unless an exemption
from registration and qualification applies, the resale by Investors of the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period, (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction,
or (z) file a general consent to service of process in any such jurisdiction.
The Company shall promptly notify Legal Counsel and each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threatening of any proceeding for such purpose.

 

(f)          The Company shall notify Legal Counsel and each Investor in writing
of the happening of any event, as promptly as practicable after becoming aware
of such event, as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (provided that in no event shall such notice contain
any material, nonpublic information), and, subject to Section 3(q), promptly
prepare a supplement or amendment to such Registration Statement to correct such
untrue statement or omission, and deliver one (1) copies of such supplement or
amendment to Legal Counsel and each Investor (or such other number of copies as
Legal Counsel or such Investor may reasonably request). The Company shall also
promptly notify Legal Counsel and each Investor who holds Registrable Securities
being sold which has provided in writing to the Company a facsimile number or
mailing address for notices in writing (i) when a prospectus or any prospectus
supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification of
such effectiveness shall be delivered to Legal Counsel and each Investor by
facsimile no later than one trading day following the day of such effectiveness
and by overnight mail), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or related
information, and (iii) of the Company’s reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate. The
Company shall use reasonable best efforts to file with the SEC in accordance
with Rule 424 under the 1933 Act the final prospectus to be used in connection
with sales pursuant to such Registration Statement by 9:30 am on the Business
Day following the Effective Date, but in any case no later than the deadline
required by Rule 424.

 

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(g)          The Company shall use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest practicable moment and to notify Legal Counsel and each Investor
who holds Registrable Securities being sold which has provided in writing to the
Company a facsimile number or mailing address for notices of the issuance of
such order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

 

(h)          If any Investor is required under applicable securities laws or
otherwise to be described in the Registration Statement as an underwriter, at
the reasonable request of such Investor, the Company shall furnish to such
Investor, on the date of the effectiveness of the Registration Statement and
thereafter from time to time on such dates as an Investor may reasonably request
(i) a letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the Investors, and (ii) an opinion, dated as of such date, of
counsel representing the Company for purposes of such Registration Statement, in
form, scope and substance as is customarily given in an underwritten public
offering, addressed to the Investors.

 

(i)          If any Investor is required under applicable securities laws or
otherwise to be described in the Registration Statement as an underwriter, the
Company shall make available for inspection by (i) such Investor, (ii) Legal
Counsel and (iii) one firm of accountants or other agents retained by the
Investors (collectively, the “Inspectors”), all pertinent financial and other
records, and pertinent corporate documents and properties of the Company
(collectively, the “Records”), as shall be reasonably deemed necessary by each
Inspector, and cause the Company’s officers, directors and employees to supply
all information which any Inspector may reasonably request; provided, however,
that each Inspector shall agree to hold in strict confidence and shall not make
any disclosure (except to an Investor) or use of any Record or other information
which the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a subpoena or order from a court
or government body of competent jurisdiction, or (c) the information in such
Records has been made generally available to the public other than by disclosure
in violation of this Agreement. Nothing herein (or in any other confidentiality
agreement between the Company and any Investor) shall be deemed to limit the
Investors’ ability to sell Registrable Securities in a manner which is otherwise
consistent with applicable laws and regulations.

 

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(j)          The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

 

(k)          The Company shall use its reasonable best efforts either to (i)
cause all of the Registrable Securities covered by a Registration Statement to
be listed on each securities exchange on which securities of the same class or
series issued by the Company are then listed, if any, if the listing of such
Registrable Securities is then permitted under the rules of such exchange or
(iii) if, despite the Company’s reasonable best efforts, the Company is
unsuccessful in satisfying the preceding clause (i), to secure the inclusion for
quotation on, the New York Stock Exchange, The NASDAQ Global Select Market, The
NASDAQ Global Market or The NASDAQ Capital Market for such Registrable
Securities and, without limiting the generality of the foregoing, to use its
reasonable best efforts to arrange for at least two market makers to register
with the Financial Industry Regulatory Authority, Inc. (“FINRA”) as such with
respect to such Registrable Securities. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 3(k).

 

(l)          The Company shall cooperate with the Investors who hold Registrable
Securities being offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Investors may reasonably request and registered in
such names as the Investors may request.

 

(m)          If requested by an Investor, the Company shall as soon as
reasonably practicable (i) incorporate in a prospectus supplement or
post-effective amendment such information as an Investor reasonably requests to
be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price being
paid therefor and any other terms of the offering of the Registrable Securities
to be sold in such offering; (ii) make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement relating to
the sale or distribution of Registrable Securities if reasonably requested by an
Investor holding any Registrable Securities.

 

10

 

 

(n)          The Company shall use its reasonable best efforts to cause the
Registrable Securities covered by a Registration Statement to be registered with
or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.

 

(o)          The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.

 

(p)          Within two (2) Business Days after a Registration Statement which
covers Registrable Securities is ordered effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

 

(q)          Notwithstanding anything to the contrary herein, at any time after
the Effective Date, the Company may delay the disclosure of material, non-public
information concerning the Company the disclosure of which at the time is not,
in the good faith opinion of the Board of Directors of the Company and its
counsel, in the best interest of the Company and, in the opinion of counsel to
the Company, otherwise required (a “Grace Period”); provided, that the Company
shall promptly (i) notify the Investors in writing of the existence of material,
non-public information giving rise to a Grace Period (provided that in each
notice the Company will not disclose the content of such material, non-public
information to the Investors) and the date on which the Grace Period will begin,
and (ii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed ten (10)
consecutive days and during any three hundred sixty five (365) day period such
Grace Periods shall not exceed an aggregate of thirty (30) days and the first
day of any Grace Period must be at least five (5) Trading Days after the last
day of any prior Grace Period (each, an “Allowable Grace Period”). For purposes
of determining the length of a Grace Period above, the Grace Period shall begin
on and include the date the Investors receive the notice referred to in clause
(i) and shall end on and include the later of the date the Investors receive the
notice referred to in clause (ii) and the date referred to in such notice. Upon
expiration of the Grace Period, the Company shall again be bound by the first
sentence of Section 3(f) with respect to the information giving rise thereto
unless such material, non-public information is no longer applicable.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended Common Shares to a transferee of an Investor in
accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which an Investor has
entered into a contract for sale, prior to the Investor’s receipt of the notice
of a Grace Period and for which the Investor has not yet settled.

 

(r)          Neither the Company nor any Subsidiary or affiliate thereof shall
identify any Investor as an underwriter without its prior written consent in any
public disclosure or filing with the SEC, the Principal Market (as defined in
the Securities Purchase Agreement) or any Eligible Market and any Purchaser
being deemed an underwriter by the SEC shall not relieve the Company of any
obligations it has under this Agreement or any other Transaction Document (as
defined in the Securities Purchase Agreement).

 

11

 

 

4.          Obligations of the Investors.

 

(a)          At least five (5) Business Days prior to the first anticipated
filing date of a Registration Statement, each Investor agrees to furnish to the
Company a completed Questionnaire in the form attached to this Agreement as
Annex A (the “Shareholders Questionnaire”). It shall be a condition precedent to
the obligations of the Company to complete any registration pursuant to this
Agreement with respect to the Registrable Securities of a particular Investor
that such Investor shall furnish to the Company such Shareholder Questionnaire,
the Registrable Securities held by it and the intended method of disposition of
the Registrable Securities held by it, and such other information, if any, as
shall be reasonably required to effect and maintain the effectiveness of the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request.

 

(b)          Each Investor, by such Investor’s acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor’s election to exclude all of such Investor’s Registrable
Securities from such Registration Statement.

 

(c)          Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of 3(f) or if the Investor receives a notice from the Company
that a Grace Period is in effect, such Investor will immediately discontinue
disposition of Registrable Securities pursuant to any Registration Statement(s)
covering such Registrable Securities until such Investor’s receipt of copies of
the supplemented or amended prospectus as contemplated by Section 3(g) or the
first sentence of 3(f) or receipt of notice that no supplement or amendment is
required. Notwithstanding anything to the contrary, the Company shall cause its
transfer agent to deliver unlegended Common Shares to a transferee of an
Investor in accordance with the terms of the Securities Purchase Agreement in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor’s receipt of
a notice from the Company of the happening of any event of the kind described in
Section 3(g) or the first sentence of 3(f) and for which the Investor has not
yet settled.

 

(d)          Each Investor covenants and agrees that it will comply with the
prospectus delivery requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable Securities pursuant
to the Registration Statement.

 

5.          Expenses of Registration.

 

All reasonable expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant to
Sections 2 and 3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and disbursements of
counsel for the Company shall be paid by the Company. The Company shall also
reimburse the Investors for the fees and disbursements of Legal Counsel in
connection with registration, filing or qualification pursuant to Sections 2 and
3 of this Agreement which amount shall be limited to $20,000 for each such
registration, filing or qualification.

 

12

 

 

6.          Indemnification.

 

In the event any Registrable Securities are included in a Registration Statement
under this Agreement:

 

(a)          To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, partners, members, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the 1933 Act or
the 1934 Act (each, an “Indemnified Person”), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, reasonable
attorneys’ fees, amounts paid in settlement or expenses, joint or several
(collectively, “Claims”), incurred in investigating, preparing or defending any
action, claim, suit, inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened, whether or
not an indemnified party is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other “blue sky” laws of any jurisdiction in
which Registrable Securities are offered (“Blue Sky Filing”), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). Subject to Section
6(c), the Company shall reimburse the Indemnified Persons, promptly as such
expenses are incurred and are due and payable, for any legal fees or other
reasonable expenses incurred by them in connection with investigating or
defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information
furnished in writing to the Company by such Indemnified Person for such
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(d), and (ii) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.

 

13

 

 

(b)          In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, its agents and each Person, if
any, who controls the Company within the meaning of the 1933 Act or the 1934 Act
and the directors, officers and agents of such controlling persons (each, an
“Indemnified Party”), against any Claim or Indemnified Damages to which any of
them may become subject, insofar as such Claim or Indemnified Damages arise out
of or are based upon any Violation, in each case to the extent, and only to the
extent, that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor expressly for use
in connection with such Registration Statement. Subject to Section 6(c), such
Investor will reimburse the Indemnified Party for any legal or other expenses
reasonably incurred by an Indemnified Party in connection with investigating or
defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of such
Investor; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.

 

14

 

 

(c)          Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for all such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnified party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In the case of an
Indemnified Person, legal counsel referred to in the immediately preceding
sentence shall be selected by the Investors holding at least a majority in
interest of the Registrable Securities included in the Registration Statement to
which the Claim relates. The Indemnified Party or Indemnified Person shall
cooperate reasonably with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action.

 

(d)          The indemnification required by this Section 6 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when reasonably detailed and itemized bills are received or
Indemnified Damages are incurred.

 

(e)          The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

 

7.          Contribution.

 

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no Person
involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution from any
Person involved in such sale of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the amount of net proceeds received by
such seller from the sale of such Registrable Securities pursuant to such
Registration Statement.

 

15

 

 

8.          Reports Under the 1934 Act.

 

With a view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or regulation of the
SEC that may at any time permit the Investors to sell securities of the Company
to the public without registration (“Rule 144”), the Company agrees to:

 

(a)          make and keep public information available, as those terms are
understood and defined in Rule 144;

 

(b)          file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and

 

(c)          furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company, if
true, that it has complied with the reporting requirements of Rule 144, the 1933
Act and the 1934 Act, (ii) unless the following are filed with the SEC through
EDGAR and are available to the public through the EDGAR system, a copy of the
most recent annual or quarterly report (if the Company files quarterly reports)
of the Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.

 

9.          Assignment of Registration Rights.

 

The rights under this Agreement shall be automatically assignable by the
Investors to any transferee of all or any portion of such Investor’s Registrable
Securities if: (i) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment; (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or assignee, and
(b) the securities with respect to which such registration rights are being
transferred or assigned; (iii) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws; (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence the transferee or assignee agrees in writing with the
Company to assume and be bound by all of the provisions contained herein; and
(v) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement.

 

10.         Amendment of Registration Rights.

 

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Required
Holders. Any amendment or waiver effected in accordance with this Section 10
shall be binding upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the holders of the
Registrable Securities. No consideration shall be offered or paid to any Person
to amend or consent to a waiver or modification of any provision of this
Agreement unless the same consideration also is offered to all of the parties to
this Agreement.

 

16

 

 

11.         Miscellaneous.

 

(a)          A Person is deemed to be a holder of Registrable Securities
whenever such Person owns or is deemed to own of record such Registrable
Securities. If the Company receives conflicting instructions, notices or
elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or
election received from such record owner of such Registrable Securities.

 

(b)          Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

 

If to the Company:

 

Elephant Talk Communications, Corp.

19103 Centre Rose Boulevard

Lutz, FL 33558

Attention: Steve van der Velden

Telephone:    (813) 926-8920

 

With a copy (for informational purposes only) to:

 

Ellenoff Grossman & Schole LLP

150 East 42nd Street

New York, NY 10017

Attention: David Selengut, Esq.

Telephone No.:    (212) 370-1300

Facsimile No.:  (212) 370-7889

E-mail: selengut@egsllp.com

 

If to the Transfer Agent:

 

Continental Stock Transfer & Trust Company

17 Battery Place

New York, NY 10004

Attn: Monty Harry

Facsimile: (212) 616-7615

 

17

 

 

If to Legal Counsel:

 

Kleinberg, Kaplan, Wolff & Cohen, P.C.

551 Fifth Avenue

New York, New York 10176

Telephone:    (212) 986-6000

Facsimile:     (212) 986-8866

Attention:      Max Karpel, Esq.

 

If to a Purchaser, to its address and facsimile number set forth on the Schedule
of Purchasers attached hereto, with copies to such Purchaser’s representatives
as set forth on the Schedule of Purchasers, or to such other address and/or
facsimile number and/or to the attention of such other Person as the recipient
party has specified by written notice given to each other party five (5) days
prior to the effectiveness of such change. Written confirmation of receipt (A)
given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s facsimile machine
containing the time, date, recipient facsimile number and an image of the first
page of such transmission or (C) provided by a courier or overnight courier
service shall be rebuttable evidence of personal service, receipt by facsimile
or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.

 

(c)          Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

 

(d)          All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of
the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of New York. Each party hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of
New York, Borough of Manhattan, for the adjudication of any dispute hereunder or
in connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.

 

18

 

 

(e)          If any provision of this Agreement is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this
Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter
hereof and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical
realization of the benefits that would otherwise be conferred upon the parties.
The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of
which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

(f)          This Agreement, the other Transaction Documents (as defined in the
Securities Purchase Agreement) and the instruments referenced herein and therein
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

 

(g)          Subject to the requirements of Section 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

 

(h)          The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.

 

(i)          This Agreement may be executed in identical counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be delivered to
the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.

 

(j)          Each party shall do and perform, or cause to be done and performed,
all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

 

(k)          All consents and other determinations required to be made by the
Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by the Required Holders.

 

19

 

 

(l)          The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.

 

(m)          This Agreement is intended for the benefit of the parties hereto
and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.

 

(n)          The obligations of each Investor hereunder are several and not
joint with the obligations of any other Investor, and no provision of this
Agreement is intended to confer any obligations on any Investor vis-à-vis any
other Investor. Nothing contained herein, and no action taken by any Investor
pursuant hereto, shall be deemed to constitute the Investors as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated herein.

 

* * * * * *

 

[Signature Page Follows]

 

20

 

 

IN WITNESS WHEREOF, each Purchaser and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

  

  COMPANY:       Elephant Talk Communications, Corp.       By:  /s/ Steven van
der Velden     Name: Steven van der Velden     Title: President and CEO

 

 

 

 

IN WITNESS WHEREOF, each Purchaser and the Company have caused their respective
signature page to this Registration Rights Agreement to be duly executed as of
the date first written above.

  

  PURCHASERS:         Hudson Bay Master Fund, Ltd.   By: Hudson Bay Capital
Management LP,
Investment Manager         By: /s/Yoav Roth   Name: Yoav Roth   Title:
Authorized Signatory         Iroquois Master Fund Ltd.         By: /s/ Joshua
Silverman      Name: Joshua Silverman      Title: Authorized Signatory        
JGB Capital Partner,LP         By: /s/ JGB Capital Partner,LP         JGB
Capital Offshore Ltd.         By: /s/JGB Capital Offshore Ltd.         JGB
Partners, LP         By: /s/ JGB Partners, LP

 

[Signature Page to Registration Rights Agreement]