REGISTRATION RIGHTS AGREEMENT
EXHIBIT 10.3
This
Registration Rights Agreement (“Agreement”) is
entered into as of August 18, 2008, among ISCO International, Inc., a Delaware
corporation with offices at 0000 Xxxxxxxxx Xxxxx, Xxx Xxxxx Xxxxxxx, Xxxxxxxx
00000 (the “Company”) and the
Lenders set forth on the signature page hereto (the “Lenders”).
W I T N E S S E T
H:
WHEREAS,
pursuant to the August 2008 Loan Agreement, dated on or about the date hereof,
by and between the Company and the Lenders (the “Loan Agreement”), the
Lenders have agreed to advance the Company from time to time up to an aggregate
amount of $3,000,000 to be evidenced by secured convertible notes (the “Notes”), subject to
the terms and conditions set forth therein; and
WHEREAS,
the terms of the Notes provide that they will be convertible into shares (the
“Conversion
Shares”) of the common stock, par value $0.001 per share (the “Common Stock”) of the
Company; and
NOW,
THEREFORE, in consideration of the mutual promises, representations, warranties,
covenants and conditions set forth in the Loan Agreement and this Agreement, the
Company and each Lender agree as follows:
1. Certain
Definitions. Capitalized terms used herein and not otherwise
defined shall have the meaning ascribed thereto in the Loan Agreement or the
Notes. As used in this Agreement, the following terms shall have the
following respective meanings:
“Commission” or “SEC” shall mean the
Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.
“Holder” and “Holders” shall
include each Lender and any transferee or transferees of Registrable Securities
and/or Notes which have not been sold to the public to whom the registration
rights conferred by this Agreement have been transferred in compliance with this
Agreement and the Loan Agreement.
“1934 Act” shall mean
the Securities Exchange Act of 1934, as amended.
The terms
“register,”
“registered”
and “registration” shall
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement.
“Registrable
Securities” shall mean: (i) the Conversion Shares (without
regard to any limitations on beneficial ownership contained in the Notes) issued
or issuable to each Holder (a) upon conversion of the Notes, (b) upon any
distribution with respect to, any exchange for or any replacement of such Notes,
or (c) upon any conversion or exchange of any securities issued in connection
with any such distribution, exchange or replacement; (ii) securities issued or
issuable upon any stock split, stock dividend, recapitalization or similar event
with respect to the foregoing; and (iii) any other security issued as a dividend
or other distribution with respect to, in exchange for or in replacement of the
securities referred to in the preceding clauses, except that any such Conversion
Shares or other securities shall cease to be Registrable Securities when (x)
they have been sold to the public or (y) they may be sold by the Holder thereof
under Rule 144(b)(1)(i).
“Registration
Expenses” shall mean all reasonable expenses to be incurred by the
Company in connection with each Holder’s registration rights under this
Agreement (such amount not to exceed $5,000 in the aggregate),
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, and blue sky fees
and expenses, reasonable fees and disbursements of counsel to Holders (using a
single counsel selected by a majority in interest of the Holders) for a review
of the Registration Statement and related documents, and the expense of any
special audits incident to or required by any such registration (but excluding
the compensation of regular employees of the Company, which shall be paid in any
event by the Company).
“Registration
Statement” shall have the meaning set forth in Section 2(a)
herein.
“Regulation D” shall
mean Regulation D as promulgated pursuant to the Securities Act, and as
subsequently amended.
“Securities Act” or
“Act” shall
mean the Securities Act of 1933, as amended.
“Selling Expenses”
shall mean all underwriting discounts, selling commissions and transfer taxes
applicable to the sale of Registrable Securities and all fees and disbursements
of counsel for Holders not included within “Registration Expenses”.
2. Registration
Requirements. The Company shall use its best efforts to effect
the registration of the resale of the Registrable Securities (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act) as would permit or facilitate the resale of all the Registrable
Securities in the manner (including manner of sale) and in all states reasonably
requested by the Holder. Such best efforts by the Company shall
include, without limitation, the following:
(a) The
Company shall, as expeditiously as possible after the date hereof:
(i) But in
any event within 90 days of the date hereof, prepare and file a registration
statement with the Commission pursuant to Rule 415 under the Securities Act on
Form S-3 under the Securities Act (or in the event that the Company is
ineligible to use such form, such other form as the Company is eligible to use
under the Securities Act provided that such other form shall be converted into a
Form S-3 as soon as Form S-3 becomes available to the Company) covering resales
by the Holders as selling stockholders (not underwriters) of the Registrable
Securities and, to the extent practicable, no other securities (the “Registration
Statement”), which Registration Statement, to the extent allowable under
the Securities Act and the rules promulgated thereunder (including Rule 416),
shall state that such Registration Statement also covers the resale of such
indeterminate number of additional shares of Common Stock as may be issued upon
conversion of the Notes by reason of stock splits, stock dividends or similar
transactions. The number of shares of Common Stock initially included
in such Registration Statement shall be no less than 15,000,000 and the Company
shall amend such Registration Statement or file additional Registration
Statements to cover the number of additional shares of Common Stock that may be
issued or issuable pursuant to the terms of the Notes in the event that the
number of shares of Common Stock initially registered is
insufficient. Nothing in the preceding sentence will limit the
Company’s obligations to reserve shares of Common Stock pursuant to Section 3(d)
of the Notes. Thereafter the Company shall use its best efforts to
cause such Registration Statement and other filings to be declared effective as
soon as possible, and in any event prior to 180 days (or, if the SEC elects to
review the Registration Statement, 240 days) following the date
hereof (the “Effectiveness
Deadline”). Without limiting the foregoing, the Company will
promptly respond to all SEC comments, inquiries and requests, and shall request
acceleration of effectiveness at the earliest possible date.
(ii) Prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection with such Registration Statement
as may be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement and notify
the Holders of the filing and effectiveness of such Registration Statement and
any amendments or supplements.
(iii) Furnish
to each Holder such numbers of copies of a current prospectus conforming with
the requirements of the Act, copies of the Registration Statement, any amendment
or supplement thereto and any documents incorporated by reference therein and
such other documents as such Holder may reasonably require in order to
facilitate the disposition of Registrable Securities owned by such
Holder.
(iv) Register
and qualify the securities covered by such Registration Statement under the
securities or “Blue Sky” laws of all domestic jurisdictions, to the extent
required; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or
jurisdictions.
(v) Notify
each Holder immediately of the happening of any event (but not the substance or
details of any such events unless specifically requested by a Holder) as a
result of which the prospectus (including any supplements thereto or thereof)
included in such Registration Statement, as then in effect, includes an untrue
statement of material fact or omits 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, and use its best efforts to promptly
update and/or correct such prospectus.
(vi) Notify
each Holder immediately of the issuance by the Commission or any state
securities commission or agency of any stop order suspending the effectiveness
of the Registration Statement or the threat or initiation of any proceedings for
that purpose. The Company shall use its best efforts to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible time.
(vii) Permit
Holders and counsel to the Holders to review the Registration Statement and all
amendments and supplements thereto within a reasonable period of time (but not
less than two (2) full Trading Days (as defined in the Notes)) prior to each
filing and will not request acceleration of the Registration Statement without
prior notice to such counsel.
(viii) List the
Registrable Securities covered by such Registration Statement with all
securities exchange(s) and/or markets on which the Common Stock is then listed
and prepare and file any required filings with the Principal
Market.
(b) Set forth
below in this Section 2(b) are (I) events that may arise that in the Holders’
consideration will interfere with the full enjoyment of their rights under this
Agreement, the Loan Agreement and the Notes (the “Interfering Events”),
and (II) certain remedies applicable in each of these events.
Paragraphs
(i) through (iii) of this Section 2(b) describe the Interfering Events, provide
a remedy to the Holders if an Interfering Event occurs.
Paragraph
(iv) provides, inter alia, that the
Holders have the right to specific performance.
The
preceding paragraphs in this Section 2(b) are meant to serve only as an
introduction to this Section 2(b), are for convenience only, and are not to be
considered in applying, construing or interpreting this Section
2(b).
(i) Delay in Effectiveness of
Registration Statement.
(A) In the
event that such Registration Statement has not been declared effective
by: (x) the Effectiveness Deadline if the SEC does not elect to
review the Registration Statement or (y) within 180 days (or, if the SEC elects
to review the Registration Statement, 240 days) of the date hereof, if the SEC
elects to review the Registration Statement, or the Company at any time fails to
issue unlegended Registrable Securities to the extent required by Article 5 of
the Loan Agreement, then the Company shall pay each Holder (other than (i) in
the case of a Registration Statement not declared effective, a Holder of
Registrable Securities that the Company could exclude from registration in
accordance with Section 9 and (ii) in the case of a failure to issue unlegended
certificates in accordance with the Loan Agreement, a Holder that is not a party
to, including as a permitted assignee bound to, the Loan Agreement) a Monthly
Delay Payment (as defined below) with respect to each successive 30-day period
(or portion thereof appropriately prorated) thereafter that effectiveness of the
Registration Statement is delayed or failure to issue such unlegended
Registrable Securities persists.
(B) Subject
to subsection (C)(II) below, as used in this Agreement, a “Monthly Delay
Payment” shall be a cash payment equal to 1% of the amount equal to (x)
the Conversion Price multiplied by (y) the sum of the number of Conversion
Shares that are Registrable Securities and held by the applicable Holder plus
the number of Conversion Shares issuable upon conversion of Notes held by such
Holder. Payment of the Monthly Delay Payments shall be due and
payable from the Company to such Holder on the later of (I) the end of the
applicable 30-day period or portion thereof and (II) 5 business days after
demand therefor. At the option of the Holder, Monthly Delay Payments
may be added to the outstanding Principal Amount of the Notes held by
it.
(C) Notwithstanding
the foregoing, (I) there shall be excluded from the calculation of the number of
days that the Registration Statement has not been declared effective the delays
which are solely attributable to delays in the Holders providing information
required for the Registration Statement or to the Holders not having otherwise
complied with their obligations hereunder; (II) the aggregate amount of Monthly
Delay Payments payable to a Holder pursuant to this Agreement shall not exceed
ten (10) times the amount of Monthly Delay Payment calculated for such Holder
pursuant to subsection (B) above; and (III) no Monthly Delay Payments shall
accrue as to any Registrable Securities from and after the date such security is
no longer a Registrable Security.
(ii) No Listing; Suspension of
Class of Shares
(A) In the
event that the Company fails, refuses or for any other reason is unable to cause
the Registrable Securities covered by the Registration Statement to be listed
(subject to issuance) with the Principal Market (as defined in the Notes) at all
times during the period (“Listing Period”) from
the date (“Effectiveness Commencement
Date”) which is the earlier of the effectiveness of the Registration
Statement and the 180th day
(or, if the SEC elects to review the Registration Statement, the 240th
day)following the date hereof until such time as the registration period
specified in Section 5 terminates, then the Holder shall have available the
remedy set forth in Section 4(a) of the Notes.
(B) In the
event that shares of Common Stock of the Company are not listed the Principal
Markets at all times following the date hereof, or are otherwise suspended from
trading and remain unlisted or suspended for 3 consecutive days, then the Holder
shall have available the remedy set forth in Section 4(a) of the
Notes.
(iii) Blackout
Periods.
(A) In the
event the Registration has become effective and, afterwards, any Holder’s
ability to sell Registrable Securities under the Registration Statement is
suspended for more than (i) 30 days in any 90-day period or (ii) 60 days in any
calendar year (“Blackout Period”),
including without limitation by reason of any suspension or stop order with
respect to the Registration Statement or the fact that an event has occurred as
a result of which the prospectus (including any supplements thereto) included in
such Registration Statement then in effect includes an untrue statement of
material fact or omits 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, then the Company shall provide to each Holder a
Monthly Delay Payment for each 30-day period or portion thereof (appropriately
prorated) from and after the expiration of the Blackout Period, on the terms set
forth in Section 2(b)(i)(B) above.
(B) Notwithstanding
anything to the contrary herein, the Company may suspend the filing or
availability of a Registration Statement or prospectus or delay the disclosure
of any material non-public information or pending development concerning the
Company for a specified period if the disclosure of such information or
development during such period would be materially detrimental, in the good
faith judgment of the Company’s general counsel and one or more executive
officers of the Company, to the Company (a “Grace Period”);
provided, however, that the Company shall promptly (i) notify the Holders in
writing of the existence of such material non-public information or pending
development giving rise to a Grace Period (provided that the Company shall not
disclose the content of such material non-public information or pending
development to the Holders) and the date on which the Grace Period will begin,
and (ii) notify the Holders in writing of the date on which the Grace Period
ends. No single Grace Period shall, without incurring any liability to pay the
Monthly Delay Payments pursuant to Section 2(b)(i)(B), exceed twenty (20)
consecutive days and the aggregate duration of all Grace Periods shall not,
without incurring any liability to pay the Monthly Delay Payments pursuant to
Section 2(b)(i)(B), exceed forty (40) days during any three hundred sixty-five
day period (each Grace Period complying with this Section 2(b)(iii)(B) being an
“Allowable Grace
Period”). For purposes of determining the length of a Grace Period, the
Grace Period shall be deemed to begin on and include the date stated in the
notice referred to in clause (i) above as the beginning of such Grace Period and
shall end on and include the earlier of (I) the date stated in the notice
referred to in clause (ii) above as the end of such Grace Period or, (II) to the
extent considered appropriate by the Company in its sole discretion, such
earlier date as to which the Company may advise the Holders in writing after the
Company’s provision of the notices described above; provided, however, that no
Grace Period shall be longer than an Allowable Grace Period without incurring
any liability to pay the Monthly Delay Payments pursuant to Section 2(b)(i)(B).
The Company agrees to use all reasonable efforts to ensure that the Holders may
resume sales under the relevant Registration Statement as soon as such
suspension, in the sole discretion of the Company, is no longer necessary. The
provisions of Sections 2(a)(iii) and 2(a)(v) of this Agreement shall not be
applicable, and the Company shall not have any obligation to pay any Monthly
Delay Payments by reason of any delay pursuant to Section 2(b)(i) or Blackout
Period, during the period of any Allowable Grace Period.
(iv) Cumulative
Remedies. The Monthly Delay Payments provided for above are in
addition to and not in lieu or limitation of any other rights the Holders may
have at law, in equity or under the terms of the Notes, the Loan Agreement and
this Agreement, including without limitation, the right to monetary contract
damages and specific performance; provided that (x) no holder of Notes may
collect default interest in addition to Monthly Delay Payments and (y) no holder
of Notes may collect more than one Monthly Delay Payment with respect to the
same 30-day period or portion thereof. Each Holder shall be entitled
to specific performance of any and all obligations of the Company in connection
with the registration rights of the Holders hereunder.
(c) The
Holders agree to cooperate as reasonably requested by the Company in connection
with the preparation and filing of the Registration Statement.
(d) If the
Holder(s) intend to distribute the Registrable Securities by means of an
underwriting, the Holder(s) shall so advise the Company. Any such
underwriting may only be administered by nationally or regionally recognized
investment bankers reasonably satisfactory to the Company.
(e) The
Company shall enter into such customary agreements for secondary offerings
(including a customary underwriting agreement with the underwriter or
underwriters, if any) and take all such other reasonable actions reasonably
requested by the Holders in connection with any underwritten offering or when
the SEC has required that the Holders be identified as underwriters in the
Registration Statement in order to expedite or facilitate the disposition of
such Registrable Securities and in such connection:
(i) make such
representations and warranties to the Holders and the underwriter or
underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters in secondary offerings;
(ii) cause to
be delivered to the sellers of Registrable Securities and the underwriter or
underwriters, if any, opinions of outside counsel to the Company, on and dated
as of the effective day (or in the case of an underwritten offering, dated the
date of delivery of any Registrable Securities sold pursuant thereto) of the
Registration Statement, and within ninety (90) days following the end of each
fiscal year thereafter, which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the Holders and the
underwriter(s), if any, and their counsel and covering such matters that are
customarily given to underwriters in underwritten offerings, addressed to the
Holders and each underwriter, if any;
(iii) cause to
be delivered, immediately prior to the effectiveness of the Registration
Statement (and, in the case of an underwritten offering, at the time of delivery
of any Registrable Securities sold pursuant thereto), and at the beginning of
each fiscal year following a year during which the Company’s independent
certified public accountants shall have reviewed any of the Company’s books or
records, a “comfort” letter from the Company’s independent certified public
accountants addressed to each underwriter (including the Holders, if the SEC has
required them to be identified as underwriters in the Registration Statement),
if any, to the extent requested by such underwriters, stating that such
accountants are independent public accountants within the meaning of the
Securities Act and the applicable published rules and regulations thereunder,
and otherwise in customary form and covering such financial and accounting
matters as are customarily covered by letters of the independent certified
public accountants delivered in connection with secondary offerings; such
accountants shall have undertaken in each such letter to update the same during
each such fiscal year in which such books or records are being reviewed so that
each such letter shall remain current, correct and complete throughout such
fiscal year; and each such letter and update thereof, if any, shall be
reasonably satisfactory to such underwriters;
(iv) if an
underwriting agreement is entered into, the same shall include customary
indemnification and contribution provisions to and from the underwriters and
procedures for secondary underwritten offerings; and
(v) deliver
such documents and certificates as may be reasonably requested by the Holders of
the Registrable Securities being sold or the managing underwriter or
underwriters, if any, to evidence compliance with clause (i) above and with any
customary conditions contained in the underwriting agreement, if
any.
(f) The
Company shall make available for inspection by the Holders, representative(s) of
all the Holders together, any underwriter participating in any disposition
pursuant to a Registration Statement, and any attorney or accountant retained by
any Holder or underwriter, all financial and other records customary for
purposes of the Holders’ due diligence examination of the Company and review of
any Registration Statement, all SEC Documents (as defined in the Loan Agreement)
filed subsequent to the Closing, pertinent corporate documents and properties of
the Company, and cause the Company’s officers, directors and employees to supply
all information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with such Registration Statement, provided
that such parties agree to keep such information
confidential. Notwithstanding the foregoing, the foregoing right
shall not extend to any Holder (i) who is not a financial investor or entity or
(ii) who, itself or through any affiliate, has any strategic business interest
that would reasonably be expected to be in conflict with any business of the
Company or its subsidiaries.
(g) Subject
to Section 2(b) above and to clause (i) below, the Company may suspend the use
of any prospectus used in connection with the Registration Statement only in the
event, and for such period of time as, (i) such a suspension is required by the
rules and regulations of the Commission or (ii) it is determined in good faith
by the Board of Directors of the Company that because of valid business reasons
(not including the avoidance of the Company’s obligations hereunder), it is in
the best interests of the Company to suspend such use, and prior to suspending
such use in accordance with this clause (ii) the Company provides the Holders
with written notice of such suspension, which notice need not specify the nature
of the event giving rise to such suspension. The Company will use
reasonable best efforts to cause such suspension to terminate at the earliest
possible date. This provision shall not affect the right of Holders
to receive Monthly Delay Payments pursuant to Section 2(b) above.
(h) If the
Holders become entitled, pursuant to an event described in clause (ii) and (iii)
of the definition of Registrable Securities, to receive any securities in
respect of Registrable Securities that were already included in a Registration
Statement, subsequent to the date such Registration Statement is declared
effective, and the Company is unable under the securities laws to add such
securities to the then effective Registration Statement, the Company shall
promptly file, in accordance with the procedures set forth herein, an additional
Registration Statement with respect to such newly Registrable
Securities. The Company shall use its best efforts to (i) cause any
such additional Registration Statement, when filed, to become effective under
the Securities Act, and (ii) keep such additional Registration Statement
effective during the period described in Section 5 below and cause such
Registration Statement to become effective within 90 days of that date that the
need to file the Registration Statement arose. All of the
registration rights and remedies under this Agreement shall apply to the
registration of the resale of such newly reserved shares and such new
Registrable Securities, including without limitation the provisions providing
for default payments contained herein.
(i) 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 Securities Act, as may
be necessary to keep such Registration Statement effective at all times during
the Registration Period (as defined below), and, during such period, comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by 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 2(h)) 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
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.
(j) Each
Holder agrees by its acquisition of the Registrable Securities that, upon
receipt of a notice from the Company of the occurrence of any event of the kind
described in Sections 2(a)(v) or 2(a)(vi), such Holder will forthwith
discontinue disposition of such Registrable Securities under the Registration
Statement until such Holder’s receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section 3(h),
or until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. The Company may provide appropriate stop
orders to enforce the provisions of this paragraph.
(k) If
requested by a Holder, the Company shall (i) as soon as practicable incorporate
in a prospectus supplement or post-effective amendment such information as a
Holder 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) as soon
as practicable 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) as soon as
practicable, supplement or make amendments to any Registration Statement if
reasonably requested by a Holder holding any Registrable
Securities.
3. Expenses of
Registration. All Registration Expenses in connection with any
registration, qualification or compliance with registration pursuant to this
Agreement shall be borne by the Company, and all Selling Expenses of a Holder
shall be borne by such Holder.
4. Registration on Form
S-3. The Company shall use its best efforts to remain
qualified for registration on Form S-3 or any comparable or successor form or
forms, or in the event that the Company is ineligible to use such form, such
form as the Company is eligible to use under the Securities Act, provided that
if such other form is used, the Company shall convert such other form to a Form
S-3 as soon as the Company becomes so eligible, provided that the Company shall
maintain the effectiveness of the Registration Statement then in effect until
such time as a Registration Statement or Form S-3 covering the Registrable
Securities has been declared effective by the SEC.
5. Registration
Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company shall keep such registration
effective until the earlier of (a) the date on which all the Holders have
completed the sales or distribution described in the Registration Statement
relating thereto or, (b) until such Registrable Securities may be sold by the
Holders under Rule 144(b)(1)(i) (provided that the Company’s transfer agent has
accepted an instruction from the Company to such effect) (the “Registration
Period”). Subject to Section 8 below, this Agreement shall be
terminated automatically without further action by any party hereto upon the
expiration of the Registration Period.
6. Indemnification.
(a) Company
Indemnity. The Company will indemnify and hold harmless each
Holder, each of its officers, directors, agents and partners, and each person
controlling of each of the foregoing, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls, within
the meaning of Section 15 of the Securities Act and the rules and regulations
thereunder, any underwriter, against all claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document (including any related registration
statement, notification or the like) incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they were made, or any violation by the Company of the Securities Act or any
state securities law or in either case, any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse each Holder, each of its officers, directors, agents and
partners, and each person controlling each of the foregoing, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating and
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to a Holder to the extent that any
such claim, loss, damage, liability or expense arises out of or is based (i) on
any untrue statement or omission based upon written information furnished to the
Company by such Holder or the underwriter (if any) therefor and stated to be
specifically for use therein or (ii) the failure of a Holder to deliver at or
prior to the written confirmation of sale, the most recent prospectus, as
amended or supplemented. The indemnity agreement contained in this
Section 6(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company (which consent will not be unreasonably
withheld).
(b) Holder
Indemnity. Each Holder will, severally and not jointly, if
Registrable Securities held by it are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify and
hold harmless the Company, each of its directors, officers, agents and partners,
and each underwriter, if any, of the Company’s securities covered by such a
registration statement, each person who controls the Company or such underwriter
within the meaning of Section 15 of the Securities Act and the rules and
regulations thereunder, each other Holder (if any), and each of their officers,
directors and partners, and each person controlling of such other Holder(s)
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statement therein not misleading in light of the
circumstances under which they were made, and will reimburse the Company and
such other Holder(s) and their directors, officers and partners, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use
therein, and provided that the maximum amount for which such Holder shall be
liable under this indemnity shall not exceed the net proceeds received by such
Holder from the sale of the Registrable Securities pursuant to the registration
statement in question. The indemnity agreement contained in this
Section 6(b) shall not apply to amounts paid in settlement of any such claims,
losses, damages or liabilities if such settlement is effected without the
consent of such Holder (which consent shall not be unreasonably
withheld).
(c) Procedure. Each
party entitled to indemnification under this Section 6 (the “Indemnified Party”)
shall give notice to the party required to provide indemnification (the “Indemnifying Party”)
promptly after such Indemnified Party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the Indemnifying Party to assume
the defense of any such claim in any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at its own expense, 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
under this Section 6 except to the extent that the Indemnifying Party is
materially and adversely affected by such failure to provide
notice. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which 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 to such claim or
litigation. Each Indemnified Party shall furnish such non-privileged
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting
therefrom.
7. Contribution. If
the indemnification provided for in Section 6 herein is unavailable to the
Indemnified Parties in respect of any losses, claims, damages or liabilities
referred to herein (other than by reason of the exceptions provided therein),
then each such Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such Indemnified Party
as a result of such losses, claims, damages or liabilities as between the
Company on the one hand and any Holder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of such Holder in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and
of any Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Holder.
In no
event shall the obligation of any Indemnifying Party to contribute under this
Section 7 exceed the amount that such Indemnifying Party would have been
obligated to pay by way of indemnification if the indemnification provided for
under Section 6(a) or 6(b) hereof had been available under the
circumstances.
The
Company and the Holders agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation (even
if the Holders or the underwriters were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding
paragraphs. The amount paid or payable by an Indemnified Party as a
result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraphs shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this section, no
Holder or underwriter shall be required to contribute any amount in excess of
the amount by which (i) in the case of any Holder, the net proceeds received by
such Holder from the sale of Registrable Securities pursuant to the registration
statement in question or (ii) in the case of an underwriter, the total price at
which the Registrable Securities purchased by it and distributed to the public
were offered to the public exceeds, in any such case, the amount of any damages
that such Holder or underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Survival. The
indemnity and contribution agreements contained in Sections 6 and 7 and the
representations and warranties of the Company referred to in Section 2(d)(i)
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement or the Loan Agreement or any underwriting
agreement, (ii) any investigation made by or on behalf of any Indemnified Party
or by or on behalf of the Company, and (iii) the consummation of the sale or
successive resales of the Registrable Securities.
9. Information by
Holders. Each Holder shall promptly furnish to the Company
such information regarding such Holder and the distribution and/or sale proposed
by such Holder as the Company may from time to time reasonably request in
writing in connection with any registration, qualification or compliance
referred to in this Agreement, and the Company may exclude from such
registration the Registrable Securities of any Holder who unreasonably fails to
furnish such information within a reasonable time after receiving such
request. The intended method or methods of disposition and/or sale
(Plan of Distribution) of such securities as so provided by such Holder shall be
included without alteration in the Registration Statement covering the
Registrable Securities and shall not be changed without written consent of such
Holder. Each Holder agrees that, other than ordinary course brokerage
arrangements, in the event it enters into any arrangement with a broker dealer
for the sale of any Registrable Securities through a block trade, special
offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, such Holder shall promptly deliver to the Company in writing
all applicable information required in order for the Company to be able to
timely file a supplement to the Prospectus pursuant to Rule 424(b) under the
Securities Act, to the extent that such supplement is legally
required. Such information shall include a description of (i) the
name of such Holder and of the participating broker dealer(s), (ii) the number
of Registrable Securities involved, (iii) the price at which such Registrable
Securities were or are to be sold, and (iv) the commissions paid or to be paid
or discounts or concessions allowed or to be allowed to such broker dealer(s),
where applicable.
10. Replacement
Certificates. The certificate(s) representing the Registrable
Securities held by any Lender (or then Holder) may be exchanged by such Lender
(or such Holder) at any time and from time to time for certificates with
different denominations representing an equal aggregate number of Registerable
Securities, as reasonably requested by such Lender (or such Holder) upon
surrendering the same. No service charge will be made for such
registration or exchange. Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
any certificates representing a Registrable Security and, in the case of loss,
theft or destruction, of indemnity reasonably satisfactory to it, or upon
surrender and cancellation of such certificate if mutilated, the Company will
make and deliver a new certificate of like tenor and dated as of such
cancellation at no charge to the holder.
11. Transfer or
Assignment. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their successors and permitted assigns. The rights granted to the
Lenders by the Company under this Agreement to cause the Company to register
Registrable Securities may be transferred or assigned (in whole or in part) to a
permitted transferee or assignee of Notes or Registrable Securities, and all
other rights granted to the Lenders by the Company hereunder may be transferred
or assigned to any permitted transferee or assignee of any Notes or Registrable
Securities; provided in each case that the Company must be given written notice
by the Lenders at the time of or within a reasonable time after said transfer or
assignment, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned; and provided further that the transferee or
assignee of such rights agrees in writing to be bound by the registration
provisions of this Agreement.
12. Reports Under The 1934
Act.
With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Securities Act or any other similar rule or regulation of the SEC that
may at any time permit the Holders 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 Securities 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 Holder so long as such Holder 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 Securities Act and the 1934
Act, (ii) a copy of the most recent annual or quarterly report 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 Holders to sell
such securities pursuant to Rule 144 without registration.
13. Miscellaneous.
(a) Remedies. The
Company and the Lenders acknowledge and agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which any of them may be entitled by
law or equity.
(b) Jurisdiction. THE
PARTIES MUTUALLY IRREVOCABLY AND UNCONDITIONALLY AGREE (I) THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND
LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK,
NEW YORK COUNTY AND THAT THE PARTIES SHALL BE SUBJECT TO THE JURISDICTION OF
SUCH COURTS, AND (II) THAT SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, SHALL CONSTITUTE PERSONAL SERVICE. NOTHING IN THIS SECTION
13(b) SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW. THE COMPANY AND EACH LENDER WAIVES, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 13(b).
(c) Notices. Any
notice or other communication required or permitted to be given hereunder shall
be in writing by facsimile, electronic transmission, mail or personal delivery
and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
to the
Company:
ISCO
International, Inc.
0000
Xxxxxxxxx Xxxxx
Xxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention:: Xxxx
Xxxxxx
E-mail:
xxxx.xxxxxx@xxxxxxxx.xxx
with a
copy to:
McGuireWoods
LLP
Suite
4100
00 Xxxxxx
Xxxxx
Xxxxxxx,
XX 00000-0000
Attn:
Xxxxx Xxxxxxxx, Esq.
Fax:
(000) 000-0000
to the
Lenders:
As set
forth on Schedule I hereto
with a
copy to:
As set
forth on Schedule I hereto
Any party
hereto may from time to time change its address for notices by giving at least
five days’ written notice of such changed address to the other parties
hereto.
(d) Waivers. No
waiver by any party of any default with respect to any provision, condition or
requirement of this Agreement shall be deemed to be a continuing waiver in the
future or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right accruing to it
thereafter.
(e) Execution in
Counterpart. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same
counterpart.
(f) Signatures. Facsimile
signatures shall be valid and binding on each party submitting the
same.
(g) Entire Agreement;
Amendment. This Agreement, together with the Loan Agreement,
the Notes and the agreements and documents contemplated hereby and thereby,
contains the entire understanding and agreement of the parties.
(h) Governing
Law. This Agreement and the validity and performance of the
terms hereof shall be governed by and construed in accordance with the laws of
the State of New York applicable to contracts executed and to be performed
entirely within such state.
(i) Jury
Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY
JURY.
(j) Titles. The
titles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
(k) No Strict
Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rule of strict construction will be applied against any
party.
[Signature
Page Follows]
In Witness Whereof, the
parties hereto have caused this Agreement to be duly executed as of the date
first above written.
ISCO
INTERNATIONAL, INC.
By: /s/Xxxx
Xxxxxx
Name:
Xxxx Xxxxxx
Title:
Chief Financial Officer
MANCHESTER
SECURITIES CORP.
By: /s/Xxxxxx Xxxxxxxxx
Name:
Xxxxxx Xxxxxxxxx
Title:
Vice President
ALEXANDER
FINANCE, L.P.
By: /s/
Xxxxxxxx Xxxxxxxx
Name: Xxxxxxxx
Xxxxxxxx
Title
President Bun Partners, Inc.
Its:
General Partner
