Exhibit 4.2
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of this 13th day of June, 2014 (the "Effective Date") by
and between Industrial Services of America, Inc., a Florida corporation
(the "Company"), and Recycling Capital Partners, LLC, an Indiana limited
liability company (the "Investor"), in connection with that certain
Securities Purchase Agreement by and among the Company and the Investor,
dated as of even date herewith (the "Securities Purchase Agreement").
Capitalized terms used herein have the respective meanings ascribed
thereto in the Securities Purchase Agreement unless otherwise defined
herein.
The parties hereby agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following meanings:
"Common Stock" means the Company's common stock, par value $0.0033
per share, and any securities into which such shares may hereinafter be
reclassified.
"Daily Interest Charge" means (i) the sum of (a) the Prime Rate,
as published in the Wall Street Journal's Bonds, Rates & Yields table
for the day of determination or if the day of determination is not a
Business Day, said rate for the last Business Day prior to the date of
determination and (b) four (4) percentage points, (ii) divided by 360.
(a) "Fair Market Value" means, for any date, the price
determined by the first of the following clauses that applies: (i) the
average of the closing sales prices for the shares of Common Stock on
the principal Trading Market as reported by Bloomberg Financial Markets
(or a comparable reporting service of national reputation selected by
the Company and reasonably acceptable to the Investor if Bloomberg
Financial Markets is not then reporting sales prices of such security)
(collectively, "Bloomberg") for the ten (10) consecutive trading days
immediately preceding such date, or (ii) if the Common Stock is not then
quoted for trading on a Trading Market and if prices for the Common
Stock are then reported in the "Pink Sheets" published by OTC Markets
Group Inc. (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent bid price per share of
the Common Stock so reported; or (iii) in all other cases, the fair
market value of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Investors of Company Warrants
representing at least a majority of the Warrant Shares then subject to
outstanding Company Warrants and reasonably acceptable to the Company,
the fees and expenses of which shall be paid by the Company.
"Prospectus" means (i) the prospectus 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, and (ii) any "free writing prospectus" as defined in Rule
405 under the 1933 Act (as defined below).
"Register," "registered" and "registration" refer to a
registration made by preparing and filing a Registration Statement or
similar document in compliance with the 1933 Act, and the declaration or
ordering of effectiveness of such Registration Statement (as defined
below) or document by the SEC. (as defined below)
"Registrable Securities" means (i) the Shares (as defined below)
and (ii) any other securities issued or issuable with respect to or in
exchange for Registrable Securities, whether by merger, charter
amendment or otherwise; provided. that, a security shall cease to be a
Registrable Security upon (A) sale pursuant to an effective Registration
Statement or Rule 144 under the 1933 Act, or (B) such security becoming
eligible for sale without restriction by the Investor pursuant to Rule
144 under the 1933 Act.
"Registration Statement " means any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement,
amendments and supplements to such Registration Statement, including
post-effective amendments, all exhibits and all material incorporated by
reference in such Registration Statement.
"SEC" means the U.S. Securities and Exchange Commission.
"Shares" means the Common Shares and the Warrant Shares.
"Value of Investor Shares" means the product of (i) the number of
Shares held by the Investor for which no resale Prospectus is available
as of the date of determination, and (ii) the Fair Market Value of such
Shares for said date.
"1933 Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
2. Registration.
(a) Registration Statements. On or after December 1, 2014, but
in any event no later than December 12, 2014 (the "Filing Deadline"),
the Company shall prepare and file with the SEC a Registration Statement
on Form S-3 (or if and only if Form S-3 is not then available to the
Company, on such form of registration statement as is then available to
effect a registration for resale of the Registrable Securities),
covering the resale of the Registrable Securities from time to time in
accordance with the methods of distribution described in Exhibit A
hereto. Subject to any SEC comments, such Registration Statement shall
include the plan of distribution attached hereto as Exhibit A. Such
Registration Statement also shall cover, to the extent allowable under
the 1933 Act, such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar
transactions with respect to the Registrable Securities.
(b) Expenses. The Company will pay all expenses incurred in
complying with this Agreement, including filing and printing fees, the
Company's counsel and accounting fees and expenses, costs associated
with clearing the Registrable Securities for sale under applicable state
securities laws, listing fees, reasonable fees and expenses of one
counsel to the Investor and the Investor's reasonable expenses in
connection with the registration, but excluding underwriting discounts,
commissions and fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals with respect to the
Registrable Securities being sold.
(c) Effectiveness.
(i) The Company shall use reasonable best efforts to have
the Registration Statement declared effective as soon as practicable.
The Company shall notify the Investor by telephone and e-mail as
promptly as practicable, and in any event, within forty-eight (48)
hours, after any Registration Statement is declared effective.
(ii) In the event that the Company determines in good faith
that the suspension of the use of any Prospectus is necessary to (A)
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 Company, in the best interests of the Company, provided,
that any delays pursuant to this clause (A) shall not exceed, in the
aggregate, ninety (90) days in any twelve (12) month period, or (B)
amend or supplement the affected Registration Statement or the related
Prospectus so that such Registration Statement or Prospectus shall
comply with applicable 1933 Act requirements or shall not include an
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 the Prospectus in light of the circumstances
under which they were made, not misleading, then the Company may suspend
the use of any such Prospectus (an "Allowed Delay"); provided that the
Company shall promptly (a) notify the Investor in writing of the
suspension of and the reasons for such suspension, but shall not
(without the prior written consent of the Investor) disclose to the
Investor any material non-public information giving rise to an Allowed
Delay, (b) advise the Investor in writing to cease all sales under the
Registration Statement until the end of the Allowed Delay and (c) use
reasonable best efforts to terminate such suspension as promptly as
practicable.
(d) Rule 415: Cutback. If at any time the SEC takes the position
that the offering of some or all of the Registrable Securities in a
Registration Statement is not eligible to be made on a delayed or
continuous basis under the provisions of Rule 415 under the 1933 Act or
requires any Investor to be named as an "underwriter", if the Company
believes, in its discretion and upon the advice of counsel, that the
Registrable Securities are eligible for registration under Rule 415 or
that the Investor is not an "underwriter" for the purposes of the 1933
Act and the registration, the Company shall use commercially reasonable
efforts to persuade the SEC that the offering contemplated by the
Registration Statement is a valid secondary offering and not an offering
by or on behalf of the issuer for the purposes of Rule 415 and that the
Investor is not an "underwriter." The Investor shall provide to the
Company in writing all information requested by the Company to support
the Investor's contention that it is not an "underwriter." The Investor
shall have the right to participate or have its counsel participate in
any meetings or discussions with the SEC regarding the SEC's position
and to comment or have its counsel comment on any written submission
made to the SEC with respect thereto. No such written submission
regarding the foregoing specifying the Investor shall be made to the SEC
to which the Investor's counsel reasonably objects. In no event shall
Company agree to name the Investor as an "underwriter" in such
Registration Statement without the prior written consent of the
Investor. In the event that, despite the Company's commercially
reasonable efforts and compliance with the terms of this Section 2(d),
the SEC refuses to alter its position, the Company shall (i) remove from
the Registration Statement the portion of the Registrable Securities
required by the SEC as a condition to the use of Rule 415, with the
first Registrable Securities to be removed being the Warrant Shares (the
"Cut Back Shares") and/or (ii) except for naming Investor as an
underwriter, agree to such restrictions and limitations on the
registration and resale of the Registrable Securities, in each case as
the SEC may request as a condition to the declaration of the
effectiveness of the Registration Statement. If one of the conditions
to the declaration of the Registration Statement's effectiveness is
naming the Investor as an underwriter, the Company shall, at the request
of the Investor, withdraw the Registration Statement. Following any
such withdrawal, the Company shall, within thirty (30) days after up to
two (2) requests by Investor, refile the Registration Statement. In
connection with any such refiling, the Company shall, at the request of
the Investor, withdraw the Registration Statement if the SEC again
requests as a condition to the declaration of the effectiveness of the
Registration Statement, that the Investor be named as an underwriter.
3. Company Obligations. The Company will use commercially reasonable
efforts to effect the registration of the Registrable Securities in
accordance with the terms hereof, and pursuant thereto the Company will,
as expeditiously as practicable:
(a) use commercially reasonable efforts to cause such
Registration Statement to become effective by the sixtieth (60th) day
from the Filing Deadline and to remain continuously effective for a
period that will terminate upon the earlier of (i) the date on which all
Registrable Securities covered by such Registration Statement have been
sold pursuant thereto, or (ii) the date on which all Registrable
Securities covered by such Registration Statement may be sold without
restriction pursuant to Rule 144 (the "Effectiveness Period").
(b) prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement and the Prospectus as
may be necessary to keep the Registration Statement effective for the
Effectiveness Period and to comply with the provisions of the 1933 Act
with respect to the distribution of all of the Registrable Securities
covered thereby;
(c) provide copies to and permit counsel of the Investor to
review each Registration Statement no fewer than five (5) days prior to
its initial filing with the SEC (two (2) business days in the case of
any amendments and supplements thereto) and not file any document to
which such counsel reasonably objects;
(d) furnish to the Investor and its legal counsel (for the
avoidance of doubt, any filing available to the Investor via the SEC's
XXXXX system shall be deemed "furnished to the Investor" hereunder) (i)
promptly after the same is prepared and publicly distributed, filed with
the SEC, or received by the Company (but not later than two (2) business
days after the filing date, receipt date or sending date, as the case
may be) (X) one (1) copy of any Registration Statement and any amendment
thereto, each preliminary prospectus and Prospectus and each amendment
or supplement thereto (other than any portion thereof which contains
information for which the Company has sought confidential treatment),
and (Y) each letter written by or on behalf of the Company to the SEC or
the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC (in the case of any such letter or correspondence,
only to the extent that it relates, and only the portion thereof
relating, to the inclusion of any Investor in the Registration Statement
and other than any portion thereof which contains information for which
the Company has sought confidential treatment or which constitutes
material non-public information as to any Investor that is not subject
to a confidentiality obligation to the Company with respect thereto),
and (ii) such number of copies of a Prospectus, including a preliminary
prospectus, and all amendments and supplements thereto as the Investor
may reasonably require in order to facilitate the disposition of the
Registrable Securities owned by the Investor that are covered by the
related Registration Statement or make them electronically available;
(e) use commercially reasonable efforts to (i) prevent the
issuance of any stop order or other suspension of effectiveness and,
(ii) if such order is issued, obtain the withdrawal or lifting of any
such order at the earliest practicable time;
(f) prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify or cooperate with
the Investor and its counsel in connection with the registration or
qualification of such Registrable Securities for offer and sale under
the securities or blue sky laws of such jurisdictions reasonably
requested by the Investor and do any and all other commercially
reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities covered
by the Registration Statement; provided, however, that the Company shall
not be required in connection therewith or as a condition thereto to (i)
qualify to do business in any jurisdiction where it would not otherwise
be required to qualify but for this Section 3(f), (ii) subject itself to
general taxation in any jurisdiction where it would not otherwise be so
subject but for this Section 3(f), or (iii) file a general consent to
service of process in any such jurisdiction;
(g) use commercially reasonable efforts to cause all Registrable
Securities covered by a Registration Statement to be listed on each
securities exchange, interdealer quotation system or other market on
which similar securities issued by the Company are then listed;
(h) promptly notify the Investor, at any time prior to the end
of the Effectiveness Period, upon discovery that, or upon the happening
of any event as a result of which, the Prospectus includes an untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and
promptly prepare, file with the SEC and furnish to such Investor a
supplement to or an amendment of such Prospectus as may be necessary so
that such Prospectus shall not include an 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 not misleading in light of the
circumstances then existing;
(i) otherwise use commercially reasonable efforts to comply with
all applicable rules and regulations of the SEC under the 1933 Act and
the 1934 Act, including, without limitation, Rule 172 under the 1933
Act, file any final Prospectus, including any supplement or amendment
thereof, with the SEC pursuant to Rule 424 under the 1933 Act, promptly
inform the Investor in writing if, at any time during the Effectiveness
Period, the Company does not satisfy the conditions specified in Rule
172 and, as a result thereof, the Investor is required to deliver a
Prospectus in connection with any disposition of Registrable Securities
and take such other actions as may be reasonably necessary to facilitate
the registration of the Registrable Securities hereunder; and make
available to its security holders, as soon as reasonably practicable,
but not later than the Availability Date (as defined below), an earnings
statement covering a period of at least twelve (12) months, beginning
after the effective date of each Registration Statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act,
including Rule 158 promulgated thereunder (for the purpose of this
subsection 3(i), "Availability Date" means the 45th day following the end
of the fourth fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is
the last quarter of the Company's fiscal year, "Availability Date" means
the 90th day after the end of such fourth fiscal quarter). If the Company
is required to file a prospectus pursuant to Rule 424 at the time the
Registration Statement is declared effective by the SEC, the Company
shall file such prospectus by 8:30 a.m., Louisville, Kentucky time, on
the next day on which the SEC's Electronic Data Gathering, Analysis and
Retrieval System accepts documents for filing; and
(j) With a view to making available to the Investor the benefits
of Rule 144 (or its successor rule) and any other rule or regulation of
the SEC that may at any time permit the Investor to sell its Shares to
the public without registration, the Company covenants and agrees to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (A) six months
after such date as all of the Registrable Securities may be sold without
restriction by the holders thereof pursuant to Rule 144 or any other
rule of similar effect or (B) such date as all of the Registrable
Securities shall have been resold; (ii) file with the SEC in a timely
manner all reports and other documents required of the Company under the
1934 Act; and (iii) furnish to the Investor upon request, as long as the
Investor owns any Registrable Securities, (A) a written statement by the
Company that it has complied in all material respects with the reporting
requirements of the 1934 Act, (B) a copy of the Company's most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C)
such other information as may be reasonably requested in order to avail
the Investor of any rule or regulation of the SEC that permits the
selling of any such Registrable Securities without registration.
4. Due Diligence Review: Information. Upon written request, the
Company shall make available, during normal business hours, for
inspection and review by any underwriters participating in a disposition
of Registrable Securities pursuant to a Registration Statement and to
any attorney or accountant retained by such underwriter, all financial
and other records, all SEC Filings and other filings with the SEC, and
all other corporate documents and properties of the Company as may be
reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and
employees, within a reasonable time period, to supply all such
information reasonably requested by the underwriters in connection
therewith (including, without limitation, in response to all questions
and other inquiries reasonably made or submitted by any of them), prior
to and from time to time after the filing and effectiveness of the
Registration Statement. As a condition to such inspection and review,
the Company may require the Investor to enter into confidentiality
agreements.
5. Obligations of the Investor.
(a) The Investor shall furnish in writing to the Company such
information regarding itself, the Registrable Securities held by it and
the intended method of disposition of the Registrable Securities held by
it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least
ten (10) Business Days prior to the first anticipated filing date of any
Registration Statement, the Company shall notify the Investor of the
information the Company requires from the Investor. The Investor shall
provide such information to the Company at least five (5) Business Days
prior to the first anticipated filing date of such Registration
Statement if the Investor elects to have any of the Registrable
Securities included in the Registration Statement.
(b) The Investor, by its 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 a
Registration Statement hereunder, unless the Investor has notified the
Company in writing of its election to exclude all of its Registrable
Securities from such Registration Statement.
(c) The Investor agrees that, upon receipt of any notice from
the Company of either (i) the suspension of the use of any Prospectus
pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant
to Section 3(h) hereof, the Investor will immediately discontinue
disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities, until the Investor is
advised by the Company that such dispositions may again be made.
6. Indemnification.
(a) Indemnification by the Company. The Company agrees to
indemnify and hold harmless the Investor and its officers, directors,
members, managers, employees and agents and each other person, if any,
who controls the Investor within the meaning of the Section 15 of the
1933 Act or Section 20 of the 1934 Act, against any losses, claims,
damages or liabilities, joint or several, to which they may become
subject under the 1933 Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or
are based upon: (i) any untrue statement or alleged untrue statement
contained in any Registration Statement, any preliminary Prospectus or
final Prospectus, or any amendment or supplement thereof or any omission
or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case
of a Prospectus, in light of the circumstances under which they were
made) not misleading; (ii) any blue sky application or other document
executed by the Company specifically for that purpose or based upon
written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable
Securities under the securities laws thereof (any such application,
document or information herein called a "Blue Sky Application"); or
(iii) the omission or alleged omission to state in a Blue Sky
Application a material fact required to be stated therein or necessary
to make the statements therein not misleading; and will reimburse the
Investor, and each such officer, director or member and each such
controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however,. that the Company
will not be liable in any such case if and to the extent that any such
loss, claim, damage or liability (or actions in respect thereof) arises
out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information
furnished by the Investor or any such controlling person in writing
specifically for use in such Registration Statement or Prospectus or any
offers or sales by or on behalf of the Investor after delivery to the
Investor by the Company of a notice of suspension described in Section
2(c)(ii) above and before delivery of a notice by the Company to the
Investor advising the Investor that dispositions may be made as provided
by Section 5(c) above.
(b) Indemnification by the Investor. The Investor agrees to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers, employees, stockholders, agents and
each person who controls the Company within the meaning of the Section
15 of the 1933 Act or Section 20 of the 1934 Act, against any losses,
claims, damages, liabilities and expenses (including reasonable attorney
and consulting fees) to which they may become subject under the 1933 Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any
untrue statement contained in any Registration Statement, any
preliminary Prospectus or final Prospectus, or any amendment or
supplement thereof or any omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein (in the case of a Prospectus, in light of the circumstances
under which they were made) not misleading, to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omissions were made in reliance upon information
furnished in writing by or on behalf of the Investor to the Company
specifically for inclusion in such Registration Statement or Prospectus
or amendment or supplement thereto, and (ii) any offers or sales by or
on behalf of the Investor after delivery to the Investor by the Company
of a notice of suspension described in Section 2(c)(ii) above and before
delivery of a notice by the Company to the Investor advising the
Investor that dispositions may be made as provided by Section 5(c)
above. In no event shall the liability of an Investor be greater in
amount than the dollar amount of the proceeds (net of all expenses paid
by the Investor in connection with any claim relating to this Section 6
and the amount of any damages the Investor has otherwise been required
to pay by reason of such untrue statement or alleged untrue statement or
omission or alleged omission) received by the Investor upon the sale of
the Registrable Securities included in the Registration Statement giving
rise to such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled
to indemnification hereunder shall (i) give prompt notice to the
indemnifying party of any claim with respect to which it seeks
indemnification and (ii) permit such indemnifying party to assume the
defense of such claim with counsel reasonably satisfactory to the
indemnified party; provided that any person entitled to indemnification
hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of
such counsel shall be at the expense of such person unless (a) the
indemnifying party has agreed in writing to pay such fees or expenses,
or (b) the indemnifying party shall have failed within a reasonable time
after notice from the indemnified party to assume the defense of such
claim and employ counsel reasonably satisfactory to the indemnified
party or (c) the named parties to such action (including any impleaded
parties) include both the indemnified party and the indemnifying party
and, in the reasonable judgment of any indemnified party, based upon
written advice of its counsel, a material conflict of interest exists
between the indemnified party and the indemnifying party with respect to
such claims (in which case, if the person notifies the indemnifying
party in writing that such person elects to employ separate counsel at
the expense of the indemnifying party, the indemnifying party shall not
have the right to assume the defense of such claim on behalf of such
person); and provided further that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying
party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the
indemnifying party in the defense of any such claim or litigation. It is
understood that the indemnifying party shall not, in connection with any
one such action or separate but substantially similar or related actions
arising out of the same general allegations or circumstances, be liable
for fees or expenses of more than one separate firm of attorneys at any
time for all such indemnified parties. No indemnifying party will,
except with the prior written consent of the indemnified party, consent
to entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect of such claim or litigation. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent.
(d) Contribution. If for any reason the indemnification provided
for in the preceding paragraphs (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless, other than for
the exceptions specified therein, then the indemnifying party 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 the relative fault of the indemnified party and
the indemnifying party, as well as any other relevant equitable
considerations. No person guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent
misrepresentation. In no event shall the contribution obligation of a
holder of Registrable Securities be greater than the dollar amount of
the proceeds (net of all expenses paid by such holder in connection with
any claim relating to this Section 6 and the amount of any damages such
holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission) received by it
upon the sale of the Registrable Securities giving rise to such
contribution obligation.
7. Suspension of Use of Prospectus or Failure to Obtain or Maintain
Effectiveness of Registration Statement.
(a) Loss of Liquidity Fee. For each day after February 1, 2015
the Registration Statement is not effective or the use of the Prospectus
by Investor has been suspended, the Company shall pay Investor a fee
equal to the product of (i) the Value of the Investor Shares as of such
day and (ii) the Daily Interest Charge for such day ("Loss of Liquidity
Fee"); provided, however, no Loss of Liquidity Fee shall be due and
payable for (i) the first thirty (30) days after February 1, 2015 if the
Company timely filed its Form S-3 Registration Statement and the Company
has used commercially reasonable efforts and, during said thirty (30)
day period, continues to use commercially reasonable efforts, to have
the Form S-3 Registration Statement declared effective; (ii) with
respect to a Loss of Liquidity Fee due in connection with the suspension
of the use of the Prospectus, up to five (5) days each calendar quarter
if the Registration Statement has not been suspended previously in said
calendar quarter and the suspension relates to the Company's possession
of material non-public information relating to a Fundamental Transaction
or an acquisition of the assets or ownership interests of another
business entity; (iii) any period a Registration Statement is not
effective as a result of the withdrawal of a Registration Statement
filed by the Company, but later withdrawn by the Company at the request
of the Investor; or (iv) with respect to any Cut Back Shares.
(b) Calculation and Payment of Loss of Liquidity Fee. Any Loss
of Liquidity Fee accruing during a calendar month shall be calculated
and paid by the Company to the Investor by the tenth (10th) day of the
following calendar month. The collection of the Loss of Liquidity Fee
shall be in addition to, and not in lieu of, any other available
remedies of the Investor arising under applicable law, whether in law or
at equity.
(c) Waiver. Investor, at the request of the Company, may waive
Investor's right to collect the Loss of Liquidity Fee. Any such waiver
must be in a writing signed by the Investor.
8. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended only
by a writing signed by the Company and the Investor. The Company may
take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company shall have obtained
the written consent to such amendment, action or omission to act, of the
Investor.
(b) Notices. All notices and other communications provided for
or permitted hereunder shall be made as set forth in the Securities
Purchase Agreement.
(c) Assignments and Transfers by Investors. The provisions of
this Agreement shall be binding upon and inure to the benefit of the
Investor and its respective successors and assigns. An Investor may
transfer or assign, in whole or from time to time in part, to one or
more persons (each, an "Assignee") its rights hereunder in connection
with the transfer of Registrable Securities by the Investor to such
Assignee, provided that the Investor and the Assignee comply with all
laws applicable thereto and provide written notice of assignment to the
Company promptly after such assignment is effected and the Assignee
agrees in writing to be bound by the terms hereof.
(d) Assignments and Transfers by the Company. This Agreement may
not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of the Investor; provided,
however, that the Company may assign this Agreement in the event that
the Company is a party to a merger, consolidation, share exchange or
similar business combination transaction in which the Common Stock is
converted into the equity securities of another Person and, from and
after the effective time of such transaction, such Person shall, by
virtue of such transaction, be deemed to have assumed the obligations of
the Company hereunder, the term "Company" shall be deemed to refer to
such Person and the term "Registrable Securities" shall be deemed to
include the securities received by the Investor in connection with such
transaction unless such securities are otherwise freely tradable by the
Investor after giving effect to such transaction.
(e) Benefits of the Agreement. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement.
(f) Counterparts; Faxes; Electronic Signature. This Agreement
may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same instrument. This Agreement may also be executed via facsimile
or electronic signature (including delivery of signatures by PDF or
other similar format), which shall be deemed an original.
(g) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof
but shall be interpreted as if it were written so as to be enforceable
to the maximum extent permitted by applicable law, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any
provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
(i) Further Assurances. The parties shall execute and deliver
all such further instruments and documents and take all such other
actions as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the agreements
herein contained.
(j) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This
Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(k) Governing Law; Consent to Jurisdiction; Waiver of Jury
Trial. This Agreement shall be construed in accordance with the laws of
the State of Indiana, without regard to the principles of conflicts of
laws. The parties further agree that any action between them shall be
heard in and expressly consent to the jurisdiction and venue of the
state sitting in Auburn, Indiana and the federal court sitting in the
City of Fort Xxxxx, Indiana for the adjudication of any civil action
asserted pursuant to this Agreement. EACH OF THE PARTIES HERETO, AFTER
CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES, IRREVOCABLY, THE RIGHT
TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING BASED HEREON, OR
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT OR ANY OTHER AGREEMENT EXECUTED OR CONTEMPLATED TO
BE EXECUTED IN CONJUNCTION WITH THIS AGREEMENT, OR ANY COURSE OF CONDUCT
OR COURSE OF DEALING IN WHICH THE INVESTOR AND THE COMPANY ARE ADVERSE
PARTIES. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE INVESTOR TO
ENTER INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties have executed this Agreement or
caused their duly authorized officers to execute this Agreement as of
the date first above written.
THE INVESTOR: THE COMPANY:
RECYCLING CAPITAL PARTNERS, LLC INDUSTRIAL SERVICES OF AMERICA,
INC.
By: /s/ Xxxxxx X. Rifkin_____ By: /s/ Xxxxx Oliver_________
Xxxxxx X. Xxxxxx, Manager Name: Xxxxx Xxxxxx
Title: Interim Chief Executive
Officer
[ Signature Page to Registration Rights Agreement ]
Exhibit A
PLAN OF DISTRIBUTION
The selling securityholders, which as used herein includes donees,
pledgees, transferees or other successors-in- interest selling shares of
common stock, interests in shares of common stock or warrants received
after the date of this prospectus from a selling securityholder as a
gift, pledge, partnership distribution or other transfer, may, from time
to time, sell, transfer or otherwise dispose of any or all of such
securities on any stock exchange, market or trading facility on which
the shares are traded or in private transactions. These dispositions may
be at fixed prices, at prevailing market prices at the time of sale, at
prices related to the prevailing market price, at varying prices
determined at the time of sale, or at negotiated prices.
The selling securityholders may use any one or more of the
following methods when disposing of securities or interests therein:
-- on any national securities exchange or quotation service on
which our common stock may be listed at the time of sale, in
the case of sales of our common stock;
-- in transactions other than on such exchanges;
-- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
-- block trades in which the broker-dealer will attempt to sell
the shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction;
-- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
-- an exchange distribution in accordance with the rules of the
applicable exchange;
-- privately negotiated transactions;
-- short sales effected after the date the registration
statement of which this Prospectus is a part is declared
effective by the Securities and Exchange Commission;
-- through the writing or settlement of options or other
hedging transactions, whether through an options exchange or
otherwise;
-- broker-dealers may agree with the selling securityholders to
sell a specified number of such shares at a stipulated price
per security;
-- ?a combination of any such methods of sale; or
-- any other method permitted by applicable law.
The selling securityholders may, from time to time, pledge or
grant a security interest in some or all of the shares of common stock
owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell such
shares from time to time, under this prospectus, or under an amendment
to this prospectus under Rule 424(b)(3) or other applicable provision of
the Securities Act amending the list of selling securityholders to
include the pledgee, transferee or other successors in interest as
selling securityholders under this prospectus. The selling
securityholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for
purposes of this prospectus.
In connection with the sale of such shares or such interests, the
selling securityholders may enter into hedging transactions with broker-
dealers or other financial institutions, which may in turn engage in
short sales of the common stock, as the case may be, in the course of
hedging the positions they assume. The selling securityholders may also
sell shares of our common stock short and deliver these securities to
close out their short positions, or loan or pledge such stock to broker-
dealers that in turn may sell these securities. The selling
securityholders may also enter into options or other transactions with
broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-
dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or
amended to reflect such transaction).
The aggregate proceeds to the selling securityholders from the
sale of the common stock offered by them will be the purchase price of
such stock less discounts or commissions, if any. Each of the selling
securityholders reserves the right to accept and, together with their
agents from time to time, to reject, in whole or in part, any proposed
purchase of common stock to be made directly or through agents. We will
not receive any of the proceeds from the sale of securities by selling
securityholders.
The selling securityholders also may resell all or a portion of
the shares in open market transactions in reliance upon Rule 144 under
the Securities Act of 1933, provided that they meet the criteria and
conform to the requirements of that rule.
The selling securityholders and any underwriters, broker-dealers
or agents that participate in the sale of the shares or interests
therein may be "underwriters" within the meaning of Section 2(a)(ll) of
the Securities Act. Any discounts, commissions, concessions or profit
they earn on any resale of the shares may be underwriting discounts and
commissions under the Securities Act. Selling securityholders who are
"underwriters" within the meaning of Section 2(a)(ll) of the Securities
Act will be subject to the prospectus delivery requirements of the
Securities Act.
To the extent required, the shares of our common stock to be sold,
the names of the selling securityholders, the respective purchase prices
and public offering prices, the names of any agents, dealer or
underwriter, any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus
supplement or, if appropriate, a post-effective amendment to the
registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only
through registered or licensed brokers or dealers. In addition, in some
states such stock may not be sold unless it has been registered or
qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.
We have advised the selling securityholders that the anti-
manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling
securityholders and their affiliates. In addition, to the extent
applicable we will make copies of this prospectus (as it may be
supplemented or amended from time to time) available to the selling
securityholders for the purpose of satisfying the prospectus delivery
requirements of the Securities Act. The selling securityholders may
indemnify any broker-dealer that participates in transactions involving
the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act.
We have agreed to indemnify the selling securityholders against
certain liabilities, including liabilities under the Securities Act and
state securities laws, relating to the registration of the shares
offered by this prospectus.
We have agreed with the selling securityholders to keep the
registration statement of which this prospectus constitutes a .part
effective until the earlier of (1) such time as all of the shares
covered by this prospectus have been disposed of pursuant to and in
accordance with the registration statement or (2) the date on which the
shares may be sold without restriction pursuant to Rule 144 of the
Securities Act.
Exhibit A
