registrationright010308.htm


    Exhibit 10.5.


    
      REGISTRATION
        RIGHTS AGREEMENT

       

      This
        Registration Rights Agreement (“Agreement”) is
        entered into as of January 3, 2008, among ISCO International, Inc., a Delaware
        corporation with offices at 1001 Cambridge Drive, Elk Grove Village, Illinois
        60007 (the “Company”) and
        Alexander Finance, L.P., an Illinois limited partnership (the “Lender”).

       

      W
        I T N E S S E T
        H:

       

      WHEREAS,
        pursuant to the Amendment to and Consent and
        Waiver Under Loan Documents (the “Amendment
        Agreement”), dated on or about the date hereof, by and between the
        Company, the Lender, Manchester Securities Corporation, and the Guarantors
        (as
        defined in the Amendment Agreement), the Company issued to Lender a new Amended
        and Restated Note (as defined in the Amendment Agreement) (the “New Note”) evidencing
        a loan made by the Lender to the Company under the Third Amended and Restated
        Loan Agreement, dated as of November 10, 2004, as amended (the “Loan Agreement”);
        and

       

      WHEREAS,
        the New Note provides that it 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, Amendment Agreement
        and this Agreement, the Company and the Lender agree as follows:

       

      1. Certain
        Definitions.  Capitalized terms used herein and not otherwise
        defined shall have the meaning ascribed thereto in the Amendment Agreement,
        the
        Loan Agreement, or the New Note.  As used in this Agreement, the
        following terms shall have the following respective meanings:

       

      “Approval
        Date” shall
        mean the date on which both (i) the  Company’s stockholders shall have
        approved the issuance of the Conversion Shares and (ii) the American Stock
        Exchange (“AMEX”) shall
        have
        approved the Conversion Shares for listing on AMEX.

       

      “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 the Lender and any transferee or transferees of Registrable Securities
        and/or the New Note 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, the Amendment Agreement, the Loan Agreement
        and
        the New Note.

       

      “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 New Note)
        issued or issuable to each Holder (a) upon conversion of the New Note, (b)
        upon
        any distribution with respect to, any exchange for or any replacement of
        the New
        Note, 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, the Initial 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(k).

       

      “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 Approval
        Date:

       

      (i) But
        in
        any event within 30 days of the Approval Date, 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
        an 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 Amended and Restated 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
        7,500,000, unless the SEC instructs the Company that a lesser number of shares
        of Common Stock will be permitted to be included in such Registration Statement,
        in which case the Registration Statement shall include the number of shares
        of
        Common Stock permitted by the SEC.  The Company shall, in accordance
        with applicable SEC rules, regulations, interpretations and practices, 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 New Note in the event that the number of shares
        of
        Common Stock initially registered is insufficient or reduced in accordance
        with
        applicable SEC rules, regulations, interpretations and
        practices.  Nothing in the preceding sentence will limit the Company’s
        obligations to reserve shares of Common Stock pursuant to Section 3(d) of
        the
        New Note.  Thereafter the Company shall use its reasonable best
        efforts to cause such Registration Statement and other filings to be declared
        effective as soon as possible, and in any event prior to 90 days (or, if
        the SEC
        elects to review the Registration Statement, 150 days) following the Approval
        Date (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 Amended New Note))
        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 the Lender
        considers will interfere with the full enjoyment of its rights under this
        Agreement, the Loan Agreement, the Amendment Agreement and the New Note (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 Lender if an Interfering Event occurs.

       

      Paragraph
        (iv) provides, interalia,
        that the Lender
        has 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 150 days of the Approval
        Date,
        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
        Section 7 of the Amendment 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 Amendment Agreement,
        a
        Holder that is not a party to, including as a permitted assignee bound to,
        the
        Amendment 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 of the New Notes multiplied by (y) the sum of the number
        of
        Conversion Shares that are Registrable Securities and held by the Holder
        plus
        the number of Conversion Shares issuable upon conversion of the New Note
        held by
        the 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 New Note 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 Lender providing information
        required for the Registration Statement or to the Lender not having otherwise
        complied with its 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 New Note)
        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 90th
        day
        following the Approval Date (or the 150th
        day if
        the SEC elects to review the Registration Statement) 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 New
        Note.

       

      (B) In
        the
        event that shares of Common Stock of the Company are not listed on the Principal
        Markets at all times following the Approval Date, 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 New
        Note.

       

      (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 New Note, the Amendment
        Agreement, the Loan Agreement and this Agreement, including without limitation,
        the right to monetary contract damages and specific performance; provided
        that
        (x) no holder of the New Note may collect default interest in addition to
        Monthly Delay Payments and (y) no holder of the New Note 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 independent 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 Purchase
        Agreement) filed subsequent to the Approval Date, 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) The
        Company shall file a Registration Statement with respect to any newly authorized
        and/or reserved Registrable Securities consisting of Conversion Shares described
        in clause (i) of the definition of Registrable Securities within five (5)
        business days of any stockholders meeting authorizing same and shall use
        its
        best efforts to cause such Registration Statement to become effective within
        sixty (60) days of such stockholders meeting.  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(k) (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 prorata
        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, the Amendment Agreement, the Loan Agreement,
        or
        the New Note 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 Purchaser
        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 Purchaser (or then Holder) may be exchanged by such
        Purchaser (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 Purchaser (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 the New Note or Registrable Securities,
        and
        all other rights granted to the Lender by the Company hereunder may be
        transferred or assigned to any permitted transferee or assignee of the New
        Note
        or Registrable Securities; provided in each case that the Company must be
        given
        written notice by the Lender 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 Lender 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 PURCHASER 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.

      1001
        Cambridge Drive

      Elk
        Grove
        Village, Illinois  60007

      Telephone:  (847)
        391-9400

      Facsimile:   (847)
        391-5015

      Attention::  Frank
        Cesario

      E-mail:
        frank.cesario@iscointl.com

       

      with
        a
        copy to:

       

      Pepper
        Hamilton LLP

      400
        Berwyn Park

      899
        Cassatt Road

      Berwyn,
        Pennsylvania 19312

      Telephone:  (610)
        640-7800

      Facsimile:  (610)
        640-7835

      Attention:  Michael
        P. Gallagher, Esq.

      E-mail:
        GALLAGMP@pepperlaw.com

      


      to
        the
        Lender:

       

      Alexander
        Finance, LP

      1560
        Sherman Avenue

      Evanston,
        Illinois

      Telephone:  (847)
        733-0232

      Facsimile:   (847)
        733-0339

      Attention:  Bradford
        T. Whitmore

      E-Mail:
        bwhitmore@gbros.com

       

      with
        a
        copy to:

       

      Sachnoff
        & Weaver

      30
        S.
        Wacker Drive

      Chicago,
        Illinois 60606

      Telephone:  (312)
        207-3879

      Facsimile:   (312)
        207-6400

      Attention:  Evelyn
        C. Arkebauer, Esq.

      E-Mail:
        earkeba@sachnoff.com

       

      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 Amendment
        Agreement, the Loan Agreement, the New Note 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/
        Frank
        Cesario

      Name:
        Frank Cesario

      Title:
        CFO

      


      


      ALEXANDER
        FINANCE, L.P.

      


      


      By:
/s/
        Bradford T.
        Whitmore

      Name:
        Bradford T. Whitmore

      Title:
        President: Bun Partners, Inc.

      Its:
        General Partner