STOCK PURCHASE AGREEMENT
The parties to this Stock Purchase Agreement ("Agreement") are Elephant Talk
Communications, Inc. ("ETCI"), a California corporation, and Rising Water
Capital AG ("RWC"), registered in Zug, Switzerland.
When executed by RWC and ETCI, this Agreement will set out ETCI's and RWC's
understanding and agreement regarding this proposed transaction.
1. RWC agrees to purchase from ETCI, and ETCI agrees to sell to
RWC, 195,947,395 restricted common shares ("Shares"), for a
total consideration of US$7,837,896.
2. The Shares to be issued to RWC shall be distributed as and
when payment is received from RWC to ETCI for such Shares.
3. As a restriction, these Shares will have a lock up period of
twelve (12) months.
4. RWC will be entitled to appoint six (6) out of eleven (11)
directors in ETCI. Current ETCI management will stay in place
and will be contracted for a five (5) year term.
5. The parties to this Agreement acknowledge the following
(a) That ETCI has closed its 60% acquisition of a company
herein referred as "True Precise";
(b) That after the closing of its acquisition of True Precise,
the total number of issued and outstanding Shares of ETCI
amounted to 80,259,670 shares;
(c) That this acquisition and its internal growth will bring
ETCI a general 2005 turnover of approximately US$10 million,
with a positive Earnings Before Interest Taxes Depreciation
and Amortization (EBITDA);
(d) That ETCI is entering into the telecommunications market
in Europe through the acquisition of various telecommunication
assets, and has entered into an agreement to purchase all the
issued and outstanding shares of a European telecommunication
company in exchange for a cash consideration of US$5,900,000;
(e) That ETCI has planned to take over the companies that own
the right of use of a dark fiber optic network covering 4,400
km in Mainland China in exchange for 64,128,238 new Shares of
ETCI to be issued;
(f) That ETCI is seeking additional funding to further expand
its growth in both China and Europe to create a strong niche
player in outsourced telecom provisioning, value added
services and integrated VoIP solutions, covering markets in
Europe, the Far East and the USA;
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(g) That ETCI will issue 24,938,759 additional Shares to
management.
6. In connection with this transaction, ETCI hereby represents that:
(a) It has due corporate authority to enter into this
Agreement and to perform the transaction contemplated herein.
(b) ETCI has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which RWC
could be obligated or liable.
(c) RWC will not have any anti-dilution rights in the Shares
to be issued.
(d) The execution, delivery and performance of this Agreement
by ETCI and the consummation by ETCI of the transaction
contemplated herein does not and will not result in a
violation of any law, rule, regulation, order, judgment,
injunction, decree or other restriction of any court or
governmental authority to which ETCI is subject, or by which
any property or asset of ETCI is bound or affected.
7. In connection with this transaction, RWC hereby represents that:
(a) RWC is duly organized, validly existing and in good
standing under the laws of its jurisdiction, and has the
necessary authority to enter into this transaction.
(b) RWC is an accredited investor as the meaning is set forth
under Regulation D of the Securities Act of 1933 as amended
(the "Act").
(c) RWC was not solicited by ETCI or any of ETCI's
representatives for the purchase of these shares.
(d) RWC has received all of the information from its
independent professional, legal and/or tax advisors as it
considers necessary or appropriate for determining whether to
purchase the shares. RWC is familiar with the business,
affairs, risks and properties of ETCI, and RWC has had an
opportunity to make inquiries of ETCI and its officers,
directors and representatives.
(e) RWC has such knowledge and expertise in financial and
business matters that it is capable of evaluating the merits
and substantial risks of an investment in the shares to be
issued and is able to bear the economic risks relevant to the
purchase of the Shares hereunder.
(f) RWC understands that there may be no market for the Shares
to be issued.
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(g) RWC's financial condition is such that RWC is under no
present or contemplated future need to dispose of any portion
of the Shares to satisfy any existing or contemplated
undertaking, need or indebtedness.
(h) RWC has no liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which ETCI
could become liable or obligated.
(i) RWC acknowledges that ETCI has not made any representations
or warranties as to the past, present or future operations of
ETCI or of the price or activity of ETCI's Shares.
(j) The execution, delivery and performance of this Agreement
by RWC and the consummation by it of the transaction
contemplated herein does not and will not result in a violation
of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental
authority to which RWC is subject.
8. ETCI and RWC agree to execute such additional documents and
take whatever actions reasonably necessary to effectuate this
transaction or otherwise carry out the intent and purpose of
this Agreement, or subsequently transfer the Shares to be
issued.
9. This Agreement sets forth the entire understanding between the
parties and no other prior written or oral agreement shall be
recognized or enforced.
10. If any clause or provision of this Agreement is later
determined to be invalid, illegal or unenforceable, the other
clauses and provisions of this Agreement shall remain in full
force and effect.
11. Every right and remedy provided herein shall be cumulative with
every other right and remedy, whether conferred herein, at law
or in equity, and may be enforced concurrently herewith, and no
waiver by the parties in the performance of any obligation by
the other shall be construed as a waiver of the same or other
default then, theretofore or thereafter occurring or existing.
At any time prior to the issuance or exchange of the Shares as
contemplated herein, this Agreement may be amended by a writing
signed by all parties hereto.
12. This Agreement may be executed in counterparts, each of which
shall constitute an original and which together, shall
constitute one and the same document.
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Date: June 30, 2005 Elephant Talk Communications, Inc.
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By: ___________________
Its: ____________________
Date: June 30, 2005 Rising Water Capital AG
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By: ___________________
Its: ____________________
Stock Purchase Agreement June 30, 2005.RWC
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