REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated as of February 28, 1997, between COMTELCO INTERNATIONAL,
INC., a Delaware corporation (the "Company"), having an address c/o Xxxxxx X.
Xxxxxxx, Esq., 00 Xxxxxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, and
INTERFINANCE INV. CO. LTD., a Hong Kong corporation, having an address at
Xxxxxxxxxxxxxxxx 00/X.X. Xxx 00, XX 0000 Xxxxxxxxxx, Xxxxxxxxxxx
("Interfinance").
WHEREAS, simultaneously with the execution and delivery of this Agreement,
Interfinance is purchasing in a private placement (the "Private Placement") from
the Company an aggregate of 2,000,000 shares (the "Shares") of the Company's
Common Stock, $.00001 par value per share (the "Common Stock"), which will be
issued in consideration of $20.00 in cash and a secured Promissory Note due on
February 28, 1998 in the principal amount of $3,999,980; and
WHEREAS, in connection with the Private Placement the Company has agreed
to register the Shares pursuant to the terms of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
mutually agree as follows:
1. Registration of the Shares.
(a) Within 180 days of the date of this Agreement, the Company shall
file a registration statement (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), with the Securities and Exchange
Commission (the "SEC"). The Registration Statement shall register the Shares for
resale under the Act and shall include Interfinance and any Transferees as
selling shareholders. A "Transferee" shall be any person or entity that is
included on a list delivered by Interfinance to the Company prior to the
effective date of the Registration Statement (the "Effective Date"), which list
shall name all persons or entities to whom Interfinance has, prior to the
Effective Date, validly transferred Shares. Collectively, Interfinance and the
Transferees are referred to herein as the "Holders."
(b) Once filed, the Company will use its best efforts to cause the
Registration Statement to become effective as promptly as possible and, if any
stop order shall be issued by the SEC in connection therewith, to use its
reasonable efforts to obtain the removal of such order. Following the effective
date of the Registration Statement, the Company shall, upon the request of a
Holder, forthwith supply such reasonable number of copies of the Registration
Statement, prospectus and other documents necessary or incidental to the
registration as shall be reasonably requested by such Holder to permit such
Holder to make a public distribution of such Holder's Shares. The Company will
use its reasonable efforts to qualify the Shares for sale in such states as the
Holders of such securities shall reasonably request, provided that no such
qualification will be required in any jurisdiction where, solely as a result
thereof, the Company would be subject to general service of process or to
taxation or qualification as a foreign corporation doing business in such
jurisdiction. The obligations of the Company hereunder with respect to the
Shares of each Holder are expressly conditioned on each Holder furnishing to the
Company such appropriate information concerning such Holder, such Holder's
Shares and the terms of each such Holder's offering of such Shares as the
Company may reasonably request.
(c) The Company shall bear the entire cost and expense of the
registration of the Shares; provided, however, that each Holder shall be solely
responsible for the fees of any counsel retained by such Holder in connection
with such registration and any transfer taxes or underwriting discounts,
commissions or fees applicable to the Shares sold by such Holder pursuant
thereto.
(d) Neither the filing of the Registration Statement by the Company
pursuant to this Agreement nor the making of any request for prospectuses by any
Holder shall impose upon any Holder any obligation to sell such Holder's Shares.
(e) A Holder, upon receipt of notice from the Company that an event
has occurred which requires a post-effective amendment to the Registration
Statement or a supplement to the prospectus included therein, shall promptly
discontinue the sale of Shares until the Holder receives a copy of a
supplemented or amended prospectus from the Company, which the Company shall
provide as soon as practicable after such notice.
2. Indemnification.
(a) The Company shall indemnify and hold harmless the Holders from
and against any and all losses, claims, damages and liabilities caused by any
untrue statement of a material fact contained in the Registration Statement, any
other registration statement filed by the Company under the Act, any
post-effective amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of this Agreement
or caused by any omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except, with
respect to each Holder, insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission based upon information
furnished or required to be furnished in writing to the Company by such Holder
expressly for use therein, which indemnification shall include each person, if
any, who controls each Holder within the meaning of the Act and each officer,
director, employee and agent of each Holder; provided, however, that the
indemnification in this paragraph (c) with respect to any prospectus shall not
inure to the benefit of any Holder (or to the benefit of any person controlling
any Holder) on account of any such loss, claim, damage or liability arising from
the sale of Shares by any Holder, if a copy of a subsequent prospectus
correcting the untrue statement or omission in such earlier prospectus was
provided to such Holder by the Company prior to the subject sale and the
subsequent prospectus was not delivered or sent by such Holder to the purchaser
prior to such sale; and provided further, that the Company shall not be
obligated to so indemnify any Holder or other person referred to above unless
such Holder or other person, as the case may be, shall at the same time
indemnify the Company, its directors, each officer signing the Registration
Statement and each person, if any, who controls the Company within the meaning
of the Act, from and against any and all losses, claims, damages and liabilities
caused by any untrue statement of a material fact contained in the Registration
Statement, any registration statement or any prospectus required to be filed or
furnished by reason of this Agreement or caused by any omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, insofar as such losses, claims, damages or
lia bilities are caused by any untrue statement or omission based upon
information furnished in writing to the Company by such Holder expressly for use
therein.
(b) If for any reason the indemnification provided for in the
preceding subparagraph is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party, in lieu
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
3. Governing Law; Jurisdiction.
(a) The Shares, when issued, will be delivered in New York. This
Agreement shall be deemed to have been made and delivered in the State of New
York and shall be governed as to validity, interpretation, construction, effect
and in all other respects by the internal laws of the State of New York.
(b) The Company and Interfinance each (a) agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement, or any
other agreement entered into between the Company and pursuant to the Private
Placement or the Registration Statement shall be instituted exclusively in New
York State Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York, (b) waives any objection which the
Company or Interfinance may have now or hereafter to the venue of any such suit,
action or proceeding, and (c) irrevocably consents to the jurisdiction of the
New York State Supreme Court, County of New York and the United States District
Court for the Southern District of New York in any such suit, action or
proceeding. The Company and Interfinance each further agrees to accept and
acknowledge service of any and all process which may be served in any such suit,
action or proceeding in the New York State Supreme Court, County of New York or
in the United States District Court for the Southern District of New York.
4. Amendment. This Agreement may only be amended by a written instrument
executed by the Company and Interfinance.
5. Entire Agreement. This Agreement constitutes the entire agreement of
the parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
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6. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
7. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered by
hand or five days after such notice mailed by registered or certified mail,
postage prepaid, return receipt requested to the address set forth on the first
page of this Agreement.
8. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
9. Severability. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
COMTELCO INTERNATIONAL INC.
By: /s/ August Xxxxxxx
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August Xxxxxxx, Chairman
INTERFINANCE INV. CO. LTD.
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx, President
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