Document:

Registration Rights Agreement

 

Exhibit 10.7

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (“Agreement”) is entered into as of
October 23, 2002 between ISCO International, Inc., a Delaware corporation with
offices at 451 Kingston Court, Mt. Prospect, Illinois 60056 (the “Company”) and
Manchester Securities Corporation, a New York corporation, and Alexander
Finance, L.P., an Illinois limited partnership (each a “Lender” and
collectively, the “Lenders”).

W I T N E S S E T H:

     WHEREAS, pursuant to that Loan Agreement by and between the Company and
the Lenders (the “Loan Agreement”), the Company desires to borrow from the
Lenders and the Lenders desire to advance, subject to the terms and conditions
set forth therein and to the discretion of the Lenders, to the Company up to an
aggregate amount not to exceed $4 million on the terms and conditions set forth
therein;

     WHEREAS, the Loan Agreement contemplates that, as evidence of such loans,
the Company shall issue to the Lenders 91/2% Notes of the Company (the
“Notes”);

     WHEREAS, pursuant to the terms of, and in partial consideration for
Lenders’ agreement to enter into the Loan Agreement, the Company has agreed to
issue Warrants (the “Warrants”) exercisable for shares (“Warrant Shares”) of
the Company’s common stock, $.001 par value (the “Common Stock”);

     WHEREAS, pursuant to the terms of, and in partial consideration for, the
Lender’s agreement to enter into the Loan Agreement, the Company has agreed to
provide the Lenders with certain registration rights with respect to the
Warrant Shares and certain other rights and remedies with respect to the
Warrants as set forth in this Agreement;

     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 the Lenders agree as follows:

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

     “Approved Markets” shall have the meaning ascribed to such term in the
Loan Agreement.

     “Commission” or “SEC” shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.

     “Commitment” shall have the meaning ascribed to such term in the Loan
Agreement.

 

 

     “Delay Payment” shall mean a payment equal to 2% of the relevant Holder’s
Commitment. Delay Payments shall be pro-rated for periods of less than 30
days.

     “Demand Date” shall mean the date when at least two-thirds (2/3) of the
holders in interest of the Warrants outstanding deliver notice to the Company
of their demand that the Company file a Registration Statement with the SEC
pursuant to the terms of this Agreement.

     “Effectiveness Deadline” shall have the meaning set forth in Section 2(a).

     “Exercise Price” shall have meaning ascribed to such term in the Warrants.

     “Filing Deadline” shall have the meaning set forth in Section 2(a).

     “Holder” and “Holders” shall mean the Lender, and any transferee or
transferees of the Warrants or Warrant Shares or Registrable Securities 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.

     “Interfering Events” shall have the meaning set forth in Section 2(b).

     “Note Amount” shall mean the outstanding Principal Amount of, the accrued
but unpaid interest on, and the accrued but unpaid Delay Payments on, the
Notes.

     “Per Share Market Value” shall mean on any particular date (a) the closing
bid price per share of the Common Stock on such date on the Approved Market on
which the Common Stock is then listed or if there is no such price on such
date, then the closing bid price on such exchange or quotation system on the
date nearest preceding such date, or (b) if the Common Stock is not listed then
on the Nasdaq National Market or any stock exchange or quotation system, the
closing bid price for a share of Common Stock in the over-the-counter market,
as reported by The Nasdaq Stock Market, Inc. or by the National Quotation
Bureau Incorporated or similar organization or agency succeeding to its
functions of reporting prices at the close of business on such date, or (c) if
the Common Stock is not then reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices), then the average of the “Pink Sheet” quotes for the relevant
conversion period, as determined in good faith by the holder, or (d) if the
Common Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by an Appraiser selected in good faith by the
holders of a majority in Principal Amount of the Notes and paid for by the
Company; provided, however, that the Company, after receipt of the
determination by such appraiser, shall have the right to select an additional
Appraiser (which may be the firm of independent accountants that regularly
reviews the Company’s financial statements), in which case, the fair market
value shall be equal to the average of the determinations by each such
Appraiser.

     “Principal Amount” shall have the meaning ascribed to such term in the
Notes.

 

 

     “Premium Redemption Price” shall mean

          (a) as to the Warrant Shares, 120% of the dollar amount which is the
product of (i) the number of shares to be redeemed, and (ii) the Per Share
Market Value for shares of Common Stock in existence at the time (x) of the
closing of a redemption of the Warrant Shares or (y) of the event triggering
the right to redemption, whichever results in a greater Premium Redemption
Price.

          (b) as to the Warrants, 120% of the dollar amount which is the product of
(i) the number of Warrant Shares to be issued to the Holder upon exercise of
Warrants, and (ii) the Per Share Market Value for shares of Common Stock in
existence at the time (x) of the closing of a redemption of the Warrants or (y)
the event triggering the right of redemption, whichever results in a greater
Redemption Price.

     “Put Notice” shall have the meaning set forth in Section 2(b)(i)(B).

     “Registrable Securities” shall mean: (a) the Warrant Shares issued or
issuable to each Holder or its permitted transferee or designee upon exercise
of the Warrants, or upon any stock split, stock dividend, recapitalization or
similar event with respect to such Warrant Shares; (b) any securities issued
or issuable to each Holder upon the exercise or exchange of any Warrants or
Warrant Shares; and (c) any other security of the Company issued as a dividend
or other distribution with respect to, conversion or exchange of, or in
replacement of, Registrable Securities.

     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.

     “Registration Expenses” shall mean all expenses to be incurred by the
Company in connection with each Holder’s registration rights under this
Agreement, including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel for the Company, “Blue
Sky” fees and expenses, reasonable fees and disbursements of counsel to Lenders
(using a single counsel selected by a majority in interest of the Registrable
Securities included in the Registration Statement) for a “due diligence”
examination of the Company and 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.

     2. Registration Requirements. The Company shall use its best efforts to
effect the registration 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 sale or distribution of all
the Registrable Securities in the manner (including manner of sale) reasonably
requested by the Holder and in all U.S. jurisdictions. Such best efforts by
the Company shall include the following:

          (a) The Company shall, as expeditiously as reasonably possible after a
Demand Date:

     (i)  But in any event within 30 days thereafter (“Filing Deadline”),
prepare and file a registration statement with the Commission 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) covering the Registrable Securities (such registration statement,
including any amendments or supplements thereto and prospectuses contained
therein, is referred to herein as 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 such number of additional shares of Common
Stock as may become issuable to prevent dilution resulting from stock splits,
stock dividends or similar events. The Registration Statement shall identify
the Holders as selling securityholders and not as underwriters. The number of
shares of Common Stock initially included in such Registration Statement shall
be no less than 2.0 times the number of Warrant Shares that are as of the date
the Registration Statement is filed issuable upon exercise of the Warrants.
Thereafter, the Company shall use its best efforts to cause such Registration
Statement to be declared effective as soon as practicable, and in any event
prior to the earlier of (i) 90 days following the applicable Demand Date or
(ii) five days after SEC clearance to request acceleration (the “Effectiveness
Deadline”).

     (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 in accordance with the intended methods of disposition
by the seller thereof as set forth in the Registration Statement and notify the
Holders of the filing and effectiveness of such Registration Statement and any
amendments or supplements.

     (iii)  After the registration, 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)  Use its best efforts to register and qualify the securities covered
by such Registration Statement under such other securities or “Blue Sky” laws
of all U.S. jurisdictions; 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 as a
result of which the prospectus (including any supplements thereto or thereof
and any information incorporated or deemed to be incorporated by reference
therein) 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, pursuant to Section 2(f), 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 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 a single firm of counsel, designated as Holders’ counsel by
the Holders of a majority of the Registrable Securities included in the
Registration Statement, to review the Registration Statement and all amendments
and supplements thereto within a reasonable period of time prior to each
filing, and shall not file any document in a form to which such counsel
reasonably objects.

     (viii)  Use its best efforts to 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 National Association of Securities Dealers, Inc. or any exchange or
market where the Common Stock is then traded.

     (ix)  If applicable, take all steps necessary to enable Holders to avail
themselves of the prospectus delivery mechanism set forth in Rule 153 (or
successor thereto) under the Act.

     (x)  File and cause to become effective additional Registration Statements
if the number of Registrable Securities at any time exceeds 85% of the number
of shares of Common Stock then registered in the existing Registration
Statements hereunder.

          (b) Set forth below in this Section 2(b) are (I) events that may arise
that the Lenders consider will interfere with the full enjoyment of their
rights under the Warrants, the Loan Agreement and this Agreement (the
“Interfering Events”), and (II) certain remedies applicable in each of these
events.

	     	
	 	Paragraphs (i) through (iv) of this Section 2(b) describe the
Interfering Events, provide a remedy to the Holders if an
Interfering Event occurs and provide that the Holders may require
that the Company redeem outstanding Warrants or Registrable
Securities at a specified price if certain Interfering Events are
not timely cured.

	     	
	 	Paragraph (vi) provides, inter alia, that if payments required as
the remedy in the case of certain of the Interfering Events are
not paid when due, the Company may be required by the Holders to
redeem outstanding Warrants or Registrable Securities at a
specified price.

 

 

	     	
	 	Paragraph (viii) 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 the Registration Statement has not been
filed by the Filing Deadline or been declared effective by the
Effectiveness Deadline, then the Company shall pay in cash or
shares of Common Stock, as provided in Section 2(b)(v), to each
Holder a Delay Payment for each 30 day period (or portion thereof)
thereafter until the earliest of (i) the date on which a Holder’s
Warrants have been redeemed pursuant to its delivery of a Put
Notice (as defined below) (with respect to that Holder only), and
(ii) the date on which the Registration Statement is declared
effective, which Delay Payments shall not in the aggregate exceed
the maximum percentage permitted by law.

	     	
	 	     (B) If the Registration Statement has not been declared
effective within 120 days of the applicable Demand Date, then each
Holder shall have the right to require the Company to redeem the
Warrants and Warrant Shares in whole or in part at the Premium
Redemption Price. Each Holder shall exercise such right by
providing the Company with written notice thereof (the “Put
Notice”), which such Put Notice shall include the type and amount
of each security that the Holder seeks to redeem and a date at
least ten (10) days from the date thereof on which the Holder seeks
the redemption to occur (the “Redemption Date”). Nothing herein
shall be construed as precluding the Holder from exercising its
exercise rights under the Warrants unless the Company redeems the
Warrants and pays the Premium Redemption Price set forth above in
full pursuant to Section 2(b)(i)(B). Delay Payments shall no
longer accrue on Warrants after such Warrants have been redeemed by
the Company pursuant hereto.

     (ii)  No Listing; Premium Price Redemption for Delisting of Class of
Shares.

	     	
	 	     In the event that (A) the Company fails, refuses or is unable
to cause the Registrable Securities covered by the Registration
Statement to be listed with the applicable Approved Markets and
each other securities exchange and market on which the Common Stock
is then traded at all times during the period (“Listing Period”)
commencing the earlier of the effective date of the Registration
Statement or 90 days following the applicable Demand Date, and
continuing thereafter for so long as any Warrants are outstanding
or (B) shares of Common Stock of the Company are delisted from the
applicable Approved Markets at any time following the applicable
Demand Date and remain delisted for 5 consecutive business days,
then at the option of each Holder and to the extent such Holder so
elects, the Company shall on 2 business days notice either (i) pay
in cash or Common Stock (as provided in Section 2(b)(v)) to such
Holder a Delay Payment

 

 

	     	
	 	for each 30-day period that the shares are
delisted or (2) redeem the Warrants and Warrant Shares held by such
Holder, in whole or in part, at a redemption price equal to the
Premium Redemption Price; provided, however, that such Holder may
revoke such request at any time prior to receipt of payment of such
Delay Payments or Premium Redemption Price, as the case may be.

     (iii)  Blackout Periods. In the event any Holder is unable to sell
Registrable Securities under the Registration Statement for more than (A) seven
(7) consecutive days or (B) an aggregate of twenty (20) days in any 12 month
period (“Suspension Grace Period”), including without limitation by reason of a
suspension of trading of the Common Stock on the Approved Market, 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, or the number of shares
of Common Stock covered by the Registration Statement is insufficient at such
time to make such sales (a “Blackout”), then the Company shall pay in cash or
Common Stock (as provided in Section 2(b)(v)) to each Holder a Delay Payment
for each 30-day period (or portion thereof) from and after the expiration of
the Suspension Grace Period, which Delay Payment shall not exceed the maximum
percentage permitted by law. In lieu of receiving the Delay Payment as
provided above, a Holder shall have the right but not the obligation to elect
to have the Company redeem its Warrants and Warrant Shares at the price equal
to the Premium Redemption Price.

     (iv)  Exercise Deficiency; Premium Price Redemption for Exercise
Deficiency. In the event that the Company does not have a sufficient number of
Warrant Shares available to satisfy the Company’s obligations to any Holder
upon receipt of a Notice of Exercise (as defined in the Warrants) or is
otherwise unable or unwilling to issue such Warrant Shares in accordance with
the terms of the Warrants for any reason after receipt of a Conversion Notice,
then: at any time five days thereafter, at the request of any Holder pursuant
to a redemption notice, the Company promptly (1) shall purchase from such
Holder, at a purchase price equal to the Premium Redemption Price, the
outstanding Warrants or Registrable Securities equal to such Holder’s pro rata
share of the Deficiency (as such term is defined below), if the failure to
issue Warrant Shares results from the lack of a sufficient number thereof and
(2) shall purchase all (or such portion as such Holder may elect) of such
Holder’s outstanding Warrants or Registrable Securities at such Premium
Redemption Price if the failure to issue Warrant Shares results from any other
cause. The “Deficiency” shall be equal to the number of Warrant Shares that
would not be issued upon exercise of the Warrants due to an insufficient number
of Warrant Shares available, if all the outstanding Warrants were submitted for
exercise at the Exercise Price set forth in the Warrants as of the date such
Deficiency is determined. Any request by a Holder pursuant to this paragraph
(iv)(B) shall be revocable by that Holder at any time prior to its receipt of
the Premium Redemption Price.

     (v)  Delay Payment and Put Terms; Status of Unpaid Delay Payments.

	     	
	 	     (A) All Delay Payments (which payments shall be pro rata on a
per diem basis for any period of less than 30 days) required to be
made in connection

 

 

	     	
	 	with the above provisions shall be paid at any
time upon demand, by the tenth (10th) day of each calendar month
for the partial or full calendar month occurring prior to that
date. Such Delay Payments shall be payable in cash. Until paid as
required in this Agreement, Delay Payments shall be deemed added
to, and a part of, the Principal Amount of a Holder’s Notes.

	     	
	 	     (B) Any Warrants required to be redeemed under this Section
2(b) shall be redeemed by no later than five business days from the
delivery of the applicable redemption request. Until redeemed, the
Holder shall be permitted to exercise the Warrants and any other
rights under the Warrants. The Holder may withdraw a redemption
request if the Company does not timely redeem the Warrants required
to be redeemed.

     (vi)  Premium Price Redemption for Delay Payment Defaults. In the event
that the Company fails or refuses to pay any Delay Payment provided for in the
foregoing paragraphs (i) through (iv) when due, at any Holder’s request and
option, the Company shall purchase all or a portion of the Warrants and Warrant
Shares held by such Holder (with Delay Payments accruing through the date of
such purchase), within five (5) days of such request, at a purchase price equal
to the Premium Redemption Price (as defined above); provided that such Holder
may revoke such request at any time prior to receipt of such payment of such
purchase price. Until such time as the Company purchases such Warrants and
Warrant Shares at the request of such Holder pursuant to the preceding
sentence, at any Holder’s request and option the Company shall as to such
Holder pay such amount by adding and including the amount of such Delay Payment
to the Principal Amount of a Holder’s Notes.

     (vii)  Cumulative Remedies. Each Delay Payment triggered by an Interfering
Event provided for in the foregoing paragraphs (ii) through (iv) shall be in
addition to each other Delay Payment triggered by another Interfering Event;
provided, however, that in no event shall the Company be obligated to pay to
any Holder Delay Payments in an aggregate amount greater than one Delay Payment
for any 30-day period (or portion thereof). The Delay Payments and mandatory
redemptions 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 Warrants, the Loan Agreement, or this Agreement, including without
limitation the right to specific performance. 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.

     (viii)  Certain Acknowledgments. The Company acknowledges that any
failure, refusal or inability by the Company described in the foregoing
paragraphs (i) through (iv) and paragraph (vi) will cause the Holders to suffer
damages in an amount that will be difficult to ascertain, including, without
limitation, damages resulting from the loss of liquidity in the Registrable
Securities and the additional investment risk in holding the Registrable
Securities. Accordingly, the parties agree that it is appropriate to include
in this Agreement the foregoing provisions for Delay Payments and mandatory
redemptions in order to compensate the Holders for such damages. The parties
acknowledge and agree that the Delay Payments and mandatory redemptions set
forth above represent the parties’ good faith effort to quantify such damages
and, as such, agree that the form and amount of such Delay Payments and
mandatory redemptions are reasonable and will not constitute a penalty. The
parties agree that the provisions of this clause

 

 

     (viii)  consist of certain
acknowledgments and agreements concerning the remedies of the Holders set forth
in clauses (i) through (iv) and paragraph (vi) of this paragraph; nothing in
this clause (viii) imposes any additional default payments and mandatory
redemptions for violations under this Agreement.

          (c) 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 investment bankers reasonably
satisfactory to the Company.

          (d) 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 therewith in order to expedite or
facilitate the disposition of such Registrable Securities. In the event that
the offering in which the Registrable Securities are to be sold is deemed to be
an underwritten offering or a Holder selling Registrable Securities is deemed
to be an underwriter, the Company shall:

     (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, without
limitation, such matters as the due authorization and issuance of the
securities being registered and compliance with securities laws by the Company
in connection with the authorization, issuance and registration thereof and
other 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 the Holders and each underwriter, if
any, 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 the Holders.

 

 

     (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;

     (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; and

     (vi)  deliver to the Holders on 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 at the beginning of
each fiscal quarter thereafter, a certificate in form and substance as shall be
reasonably satisfactory to the Holders, executed by an executive officer of the
Company and to the effect that all the representations and warranties of the
Company contained in the Purchase Agreement are still true and correct except
as disclosed in such certificate; the Company shall, as to each such
certificate delivered at the beginning of each fiscal quarter, update or cause
to be updated each such certificate during such quarter so that it shall remain
current, complete and correct throughout such quarter; and such updates
received by the Holders during such quarter, if any, shall have been reasonably
satisfactory to the Holders.

          (e) The Company shall make available for inspection, upon reasonable
written notice and during regular business hours, 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 issuance of the Warrants,
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.

          (f) If requested by at least two-thirds (2/3) of the Holders in interest
of the Warrants outstanding, the Company shall file a Registration Statement
with respect to any newly authorized and/or reserved shares, with respect to
its obligation to reserve or register Registrable Securities, within 30 days of
any corporate action authorizing or reserving same and shall file a
Registration Statement with respect to additional Registrable Securities within
30 days of the occurrence of an event referred to in Section 2(a)(x) and shall
use its best efforts to cause, in either case, such Registration Statement to
become effective within seventy-five (75) days of such corporate action or such
occurrence, as the case may be. If the Holders become entitled, pursuant to an
event described in clause (c) 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, if requested by at least two-thirds (2/3) of the
Holders in interest of the Warrants outstanding, 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 (x) cause any such additional Registration Statement, when filed, to become
effective under the Securities Act, and (y) keep such additional Registration
Statement effective during the period described in Section 5 below. All of the
registration rights and remedies under this Agreement shall apply to the
registration of such newly reserved shares and such new Registrable Securities,
including, without limitation, the provisions providing for Delay Payments
contained herein.

     3. Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance with registration
pursuant to this Agreement shall be borne by the Company.

     4. Registration on Form S-3; Other Forms. The Company shall use its best
efforts to qualify 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.

     5. Registration Period. In the case of the registration effected by the
Company pursuant to this Agreement, the Company will use its best efforts to
keep such registration effective until the two year anniversary of the
effectiveness date of each Registration Statement.

     6. Indemnification.

          (a) The Company Indemnity. The Company will indemnify each Holder, each
of its officers, directors and partners, and each person controlling each
Holder, 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, 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 and partners, and each
person controlling such Holder, 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 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. 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 the
Company, each of its directors, officers, 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 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, 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. 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 such party’s 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 Article
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 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 each of such Indemnified Parties, shall contribute to the amount
paid or payable by each 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 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 reasonably promptly furnish
to the Company such information regarding such Holder and the distribution
and/or sale proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this

 

 

Agreement. 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, except that
such Holder may not require an intended method of disposition which violates
applicable securities law.

     10. Replacement Certificates. The certificate(s) representing the Warrant
Shares held by the Lender (or then Holder) may be exchanged by the Lender (or
such Holder) at any time and from time to time for certificates with different
denominations representing an equal aggregate number of Warrant Shares, as
reasonably requested by the Lender (or such Holder) upon surrendering the same.
No service charge will be made for such registration or transfer or exchange.

     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 transferee
or assignee of Warrants, and all other rights granted to the Lenders by the
Company hereunder may be transferred or assigned to (a) any transferee or
assignee of any Warrants, or (b) any affiliate of a Lender; provided in each
case that: (A) any transfer of Warrants shall be for at least the right to
acquire 500,000 Warrant Shares; and (B) the Company must be given written
notice by such Holder 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; provided that the transferee or
assignee of such rights agrees in writing to be bound by the provisions of this
Agreement.

     12. 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. EACH OF THE COMPANY AND THE LENDERS (I) HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE UNITED STATES SITTING
IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (II) HEREBY WAIVES, AND AGREES
NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER. EACH OF THE

 

 

COMPANY AND THE LENDERS CONSENTS
TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A
COPY THEREOF TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER
THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND
SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH
SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW.

          (c) Notices. Any notice or other communication required or permitted to
be given hereunder shall be in writing by facsimile, 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.

451 Kingston Court

Mt. Prospect, Illinois 60056

Attn: Frank Cesario

Phone: (847) 391-9400

Fax: (847) 391-5015

	 	with copies to:

	 	Pepper Hamilton LLP

400 Berwyn Park

899 Cassatt Road

Berwyn, Pennsylvania 19312

Attn: Michael P. Gallagher, Esq.

Tel: (610) 640-7807

Fax: (610) 640-7835

     to Manchester:

	 	Manchester Securities Corporation

712 Fifth Avenue, 36th Floor

New York, New York 10019

Attention: Dan Gropper

Phone: (212) 974-6000

Fax: (212) 974-2092

	 	with copies to:

	 	Kleinberg, Kaplan, Wolff & Cohen, P.C.

551 Fifth Avenue

New York, New York 10176

Attention: Lawrence D. Hui, Esq.

Phone: (212) 986-6000

Fax: (212) 986-8866

     to Alexander Finance, L.P.:

 

 

	 	Alexander Finance, L.P.

1560 Sherman Avenue, Suite 900

Evanston, Illinois 60201

Attn: Bradford T. Whitmore

Phone: (847) 733-1230

Fax: (847) 733-0339

	 	with copies to:

	 	Sachnoff & Weaver

30 S. Wacker Drive

Chicago, Illinois 60606

Attn: Evelyn C. Arkebauer, Esq.

Phone: (312) 207-3879

Fax: (312) 207-6400

     Any party hereto may from time to time change its address for notices by
giving at least 10 days’ written notice of such changed address to the other
parties hereto.

          (d) Indemnity. Each party shall indemnify each other party against any
loss, cost or damages (including reasonable attorney’s fees) incurred as a
result of such parties’ breach of any representation, warranty, covenant or
agreement in this Agreement.

          (e) 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. The representations and warranties and the
agreements and covenants of the Company and each Lender contained herein shall
survive the Closing.

          (f) Execution. 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.

          (g) Publicity. The Company agrees that it will not disclose, and will not
include in any public announcement, the name of any Lender without its express
written approval, unless and until such disclosure is required by law or
applicable regulation, and then only to the extent of such requirement. The
Company agrees to deliver a copy of any public announcement regarding the
matters covered by this Agreement or any agreement or document executed
herewith to each Lender and any public announcement including the name of a
Lender to such Lender, prior to the publication of such announcements.

          (h) No Piggyback on Registration. Neither the Company nor any of its
security holders (other than Holders in such capacity pursuant hereto) may
include securities of the Company in the Registration Statement other than the
Registrable Securities, and the Company shall not after the date hereof enter
into any agreement providing any such right to any of its security holders
unless consented to by the Holders of at least two-thirds (2/3) of the then
issued or issuable Registrable Securities.

 

 

          (i) Entire Agreement. This Agreement, together with the Loan Agreement,
the Notes, the Warrants, the Guaranties and the agreements and documents
contemplated hereby and thereby, contains the entire understanding and
agreement of the parties, and may not be modified or terminated except by a
written agreement signed by both parties.

          (j) Governing Law. THIS AGREEMENT AND THE VALIDITY AND PERFORMANCE OF THE
TERMS HEREOF SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS EXECUTED AND
TO BE PERFORMED ENTIRELY IN SUCH STATE.

          (k) Severability. (i) The parties acknowledge and agree that the Lenders
are not agents, affiliates or partners of each other, that all representations,
warranties, covenants and agreements of the Lenders hereunder are several and
not joint, that no Lender shall have any responsibility or liability for the
representations, warrants, agreements, acts or omissions of any other Lender,
and that any rights granted to “Lenders” hereunder shall be enforceable by each
Lender hereunder.

               (ii) If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any other provision of this
Agreement in any other jurisdiction.

          (l) Jury Trial. EACH PARTY HERETO WAIVES THE RIGHT TO A TRIAL BY JURY.

          (m) Titles. The titles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this Agreement.

          (n) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the same shall be in writing and signed by the Company and the
Holders of at least two-thirds (2/3) of the then issued or issuable Registrable
Securities; provided, however, that, for the purposes of this sentence,
Registrable Securities that are owned, directly or indirectly, by the Company,
or an affiliate of the Company are not deemed outstanding.

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/ Amr Abdelmonem
	 	 	 	 	

	 	 	 	 	Name: Amr Abdelmonem, Ph.D.

Title: Chief Executive Officer

	 	 	LENDERS:

	 	 	MANCHESTER SECURITIES CORPORATION

	 	 	
By:	 	/s/ Elliot Greenberg
	 	 	 	 	

	 	 	 	 	Name: Elliot Greenberg

Title: Vice President

	 	 	ALEXANDER FINANCE, L.P.

	 	 	
By:	 	/s/
Bradford T. Whitmore
	 	 	 	 	

	 	 	 	 	Name: Bradford
T. Whitmore

Title: President, Bun Partners, Inc.

[Signature page to Registration Rights Agreement]Common Stock Purchase Warrant Agreement

 

Exhibit 10.8

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR OTHERWISE. THIS WARRANT
SHALL NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE
UNLAWFUL. THE SECURITIES ARE “RESTRICTED” AND MAY NOT BE RESOLD OR TRANSFERRED
EXCEPT AS PERMITTED UNDER THE ACT PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.

COMMON STOCK PURCHASE WARRANT

No. A-2

To Purchase Shares of $.001 Par Value Common Stock of

ISCO INTERNATIONAL, INC.

     THIS CERTIFIES that, for value received, ALEXANDER FINANCE, L.P., an
Illinois limited partnership, (the “Purchaser”) is entitled, upon the terms and
subject to the conditions hereinafter set forth, at any time on or after the
date hereof and on or prior to 5:00 p.m. New York City time on April 15, 2004
(the “Termination Date”), but not thereafter, to subscribe for and purchase
from ISCO INTERNATIONAL, INC., a Delaware corporation (the “Company”),
2,190,500 shares (the “Warrant Shares”) of the Company’s common stock, $.001
par value (the “Common Stock”), at an exercise price equal to $.20 (the
“Exercise Price”). The Exercise Price and the number of Warrant Shares
purchasable upon exercise of this Warrant shall be subject to adjustment as
provided herein. This Warrant is being issued in connection with a loan made
by the Purchaser on the date hereof pursuant to the Loan Agreement dated
October 23, 2002 (the “Agreement”) entered into between the Company and the
Purchaser, among others. Capitalized terms used herein and not defined shall
have the meaning specified in the Agreement.

	1.	  	Title of Warrant. Prior to the expiration hereof and subject to
compliance with applicable laws, this Warrant and all rights hereunder are
transferable, in whole or in respect of the right to purchase any part of
the Warrant Shares, at the office or agency of the Company by the holder
hereof in person or by duly authorized attorney, upon surrender of this
Warrant together with (a) the Assignment Form annexed hereto properly
endorsed, and (b) any other documentation reasonably necessary to satisfy
the Company that such transfer is in compliance with all applicable
securities laws.
	 
	2.	  	Authorization of Shares. The Company covenants that all shares of Common
Stock which may be issued upon the exercise of rights represented by this
Warrant will, upon exercise of the rights represented by this Warrant and
payment of the Exercise Price as set forth herein be duly authorized,
validly issued, fully paid and nonassessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue or
otherwise specified herein).

 

 

	3.	  	Exercise of Warrant.
	 
	(a)	  	Exercise of the purchase rights represented by this Warrant may be made
at any time or times, in whole or in part before 5:00 p.m. New York City
time on the Termination Date, or such earlier date on which this Warrant
may terminate as provided in Section 11 below, by the surrender (which may
be by fax) on any business day of this Warrant and the Notice of Exercise
annexed hereto duly completed and executed, at the principal office of the
Company (or such other office or agency of the Company as it may designate
by notice in writing to the registered holder hereof at the address of
such holder appearing on the books of the Company), and upon payment of
the full Exercise Price of the shares thereby purchased; whereupon the
holder of this Warrant shall be entitled to receive a certificate for the
number of shares of Common Stock so purchased. Certificates for shares
purchased hereunder shall be delivered to the holder hereof within three
(3) Trading Days (as defined below) after the date on which this Warrant
shall have been exercised as aforesaid. The certificates so delivered
shall be in such denominations as may be requested by the holder hereof
and shall be registered in the name of such holder or such other name as
shall be designated by such holder. Payment of the Exercise Price of the
shares shall be by certified check or cashier’s check or by wire transfer
(of same day funds) to an account designated by the Company in an amount
equal to the Exercise Price multiplied by the number of shares being
purchased.
	 
	(b)	  	Alternatively, the Warrant holder may exercise this Warrant, in whole or
in part in a “cashless” or “net-issue” exercise by delivering to the
offices of the Company or any transfer agent for the Common Stock this
Warrant, together with a Notice of Exercise specifying the number of
Warrant Shares to be delivered to such Warrant holder (“Deliverable
Shares”) and the number of Warrant Shares with respect to which this
Warrant is being surrendered in payment of the aggregate Exercise Price
for the Deliverable Shares (“Surrendered Shares”).
	 
	 	  	The number of Deliverable Shares shall be calculated as follows:

	 	 	 	 
	# of Deliverable Shares = # of Surrendered Shares x  Fair Market Value of Common Stock less Exercise Price	 
	 	
          Fair Market Value of Common Stock	 

	 	  	“Fair Market Value” shall have the meaning specified in Section 12(c)
below.
	 
	 	  	In the event that the Warrant is not exercised in full, the number of
Warrant Shares shall be reduced by the number of such Warrant Shares for
which this Warrant is exercised and/or surrendered, and the Company, at
its expense, shall within three (3) Trading Days issue and deliver to or
upon the order of the Warrant holder a new Warrant of like tenor in the
name of Warrant holder or as Warrant holder (upon payment by Warrant
holder of any applicable transfer taxes) may request, reflecting such
adjusted Warrant Shares.
	 
	 	  	All exercises will be deemed to occur as of the date of the Notice of
Exercise (or such later date as may be specified in the Notice of
Exercise), and certificates for shares of Common Stock purchased
hereunder shall be delivered to the holder hereof within three (3)
Trading Days after the date on which this Warrant shall have been
exercised as aforesaid. The Warrant holder may withdraw its Notice of
Exercise under Section 3(a) or

2

 

	 	  	3(b) at any time thereafter if the Company fails to timely deliver the
applicable certificates to the Warrant holder as provided in this
Warrant.
	 
	 	  	The Warrant holder shall not be required to physically surrender this
Warrant to the Company unless this Warrant is being exercised for all of
the remaining Warrant Shares for which it is exercisable. The Warrant
holder and the Company shall maintain records showing the number of
Warrant Shares for which this Warrant has been exercised and the dates of
such exercises or shall use such other method, reasonably satisfactory to
the Warrant holder and the Company, so as not to require physical
surrender of this Warrant upon each such exercise. Notwithstanding the
foregoing, if this Warrant is exercised as aforesaid, the Warrant holder
may not transfer this Warrant unless it first physically surrenders this
Warrant to the Company, whereupon the Company will forthwith issue and
deliver upon the order of the Warrant holder a new Warrant of like tenor,
registered as the Warrant holder may request, representing in the
aggregate the remaining number of Warrant Shares for which this Warrant
may be exercised. The Warrant holder and any assignee, by acceptance of
this Warrant or a new Warrant, acknowledge and agree that, by reason of
the provisions of this paragraph, following any partial exercise of this
Warrant, the number of Warrant Shares for which this Warrant is
exercisable may be less than the number of Warrant Shares set forth on
the face hereof.
	 
	(c)	  	In lieu of delivering physical certificates representing the Common Stock
issuable upon exercise, provided the Company’s transfer agent is
participating in the Depository Trust Company (“DTC”) Fast Automated
Securities Transfer (“FAST”) program, upon request of the Warrant holder,
the Company shall use its best efforts to cause its transfer agent to
electronically transmit the Common Stock issuable upon exercise to the
Warrant holder by crediting the account of Warrant holder’s prime broker
with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.
The time periods for delivery described in the immediately preceding
paragraph shall apply to the electronic transmittals described herein.
	 
	 	  	The term “Trading Day” means (x) if the Common Stock is listed on the New
York Stock Exchange or the American Stock Exchange, a day on which there
is trading on such stock exchange, or (y) if the Common Stock is not
listed on either of such stock exchanges but sale prices of the Common
Stock are reported on an automated quotation system, a day on which
trading is reported on the principal automated quotation system on which
sales of the Common Stock are reported, or (z) if the foregoing
provisions are inapplicable, a day on which quotations are reported by
National Quotation Bureau Incorporated.
	 
	4.	  	No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant.
	 
	5.	  	Charges, Taxes and Expenses. Issuance of certificates for shares of
Common Stock upon the exercise of this Warrant shall be made without
charge to the holder hereof for any issue or transfer tax or other
incidental expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company; provided, however,
that in the event certificates for shares of Common Stock are to be issued
in a

3

 

	 	  	name other than the name of the holder of this Warrant, this Warrant when
surrendered for exercise shall be accompanied by the Assignment Form
attached hereto duly executed by the holder hereof; and provided further,
that the Company shall not be required to pay any tax or taxes which may
be payable in respect of any transfer involved in the issuance of any
Warrant certificates or any certificates for the Warrant Shares other
than the issuance of a Warrant certificate to the Purchaser in connection
with the Purchaser’s surrender of a Warrant certificate upon the exercise
of less than all of the Warrants evidenced thereby, and the Company shall
not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the
reasonable satisfaction of the Company that such tax has been paid. The
holder shall be responsible for income taxes due under federal or state
law, if any such tax is due.
	 
	6.	  	Closing of Books. The Company will at no time close its shareholder
books or records in any manner which interferes with the timely exercise
of this Warrant.
	 
	7.	  	No Rights as Shareholder until Exercise. Subject to Section 12 of this
Warrant and the provisions of any other written agreement between the
Company and the Purchaser, the Purchaser (or any subsequent holder hereof)
shall not be entitled to vote or receive dividends or be deemed the holder
of Warrant Shares or any other securities of the Company that may at any
time be issuable on the exercise hereof for any purpose, nor shall
anything contained herein be construed to confer upon the Purchaser, as
such, any of the rights of a stockholder of the Company or any right to
vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action (whether upon any recapitalization, issuance of stock,
reclassification of stock, change of par value, or change of stock to no
par value, consolidation, merger, conveyance or otherwise) or to receive
notice of meetings, or to receive dividends or subscription rights or
otherwise until the Warrant shall have been exercised as provided herein.
However, at the time of the exercise of this Warrant pursuant to Section 3
hereof, the Warrant Shares so purchased hereunder shall be deemed to be
issued to such holder as the record owner of such shares as of the close
of business on the date on which this Warrant shall have been exercised.
	 
	8.	  	Assignment and Transfer of Warrant. This Warrant may be assigned in
whole or in part by the surrender of this Warrant and the Assignment Form
annexed hereto duly executed at the office of the Company (or such other
office or agency of the Company as it may designate by notice in writing
to the registered holder hereof at the address of such holder appearing on
the books of the Company); provided, however, that this Warrant may not be
resold or otherwise transferred except (i) in a transaction registered
under the Securities Act, or (ii) in a transaction pursuant to an
exemption, if available, from registration under the Securities Act and
whereby, if requested by the Company, an opinion of counsel is obtained by
the holder of this Warrant to the effect that the transaction is so
exempt.
	 
	9.	  	Loss, Theft, Destruction or Mutilation of Warrant. In the event that the
holder hereof notifies the Company that its Warrant has been mutilated,
lost, stolen or destroyed, then a replacement Warrant identical in all
respects to the original Warrant (except for any

4

 

	 	  	registration number and any adjustments to the Exercise Price or the
number of Warrant Shares issuable thereunder if different than that shown
on the original Warrant) shall be delivered to the holder by the Company
within three (3) Trading Days of such notice; provided, that in case of
loss, theft or destruction, the holder has provided the Company with an
agreement reasonably satisfactory to the Company to indemnify the Company
against any loss in connection with such lost, stolen or destroyed
Warrant.
	 
	10.	  	Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted
herein shall be a Saturday, Sunday or a legal holiday, then such action
may be taken or such right may be exercised on the next succeeding day not
a legal holiday.
	 
	11.	  	[Intentionally Omitted]
	 
	12.	  	Adjustments of Exercise Price and Number of Warrant Shares.
	 
	 	  	The number of and kind of securities purchasable upon exercise of this
Warrant and the Exercise Price shall be subject to adjustment from time
to time as follows:
	 
	(a)	  	Subdivisions, Combinations and other Issuances. If the Company shall at
any time after the date hereof but prior to the expiration of this Warrant
subdivide its outstanding securities as to which purchase rights under
this Warrant exist, by split-up, spin-off or otherwise, or combine its
outstanding securities as to which purchase rights under this Warrant
exist, the number of Warrant Shares as to which this Warrant is
exercisable as of the date of such subdivision, split-up, spin-off or
combination shall forthwith be proportionately increased in the case of a
subdivision, or proportionately decreased in the case of a combination.
Appropriate proportional adjustments (decrease in the case of subdivision,
increase in the case of combination) shall also be made to the Exercise
Price payable per share, so that the aggregate Exercise Price payable for
the total number of Warrant Shares purchasable under this Warrant as of
such date shall remain the same as it would have been before such
subdivision or combination.
	 
	(b)	  	Stock Dividend. If at any time after the date hereof the Company
declares a dividend or other distribution on Common Stock payable in
Common Stock or other securities or rights convertible into Common Stock
(“Common Stock Equivalents”) without payment of any consideration by
holders of Common Stock for the additional shares of Common Stock or the
Common Stock Equivalents (including the additional shares of Common Stock
issuable upon exercise or conversion thereof), then the number of shares
of Common Stock for which this Warrant may be exercised shall be increased
as of the record date (or the date of such dividend distribution if no
record date is set) for determining which holders of Common Stock shall be
entitled to receive such dividends, in proportion to the increase in the
number of outstanding shares (and shares of Common Stock issuable upon
conversion of all such securities convertible into Common Stock) of Common
Stock as a result of such dividend, and the Exercise Price shall be
proportionately reduced so that the aggregate Exercise Price for all the
Warrant Shares issuable hereunder immediately after the record date (or on
the date of such distribution,

5

 

	 	  	if applicable), for such dividend shall equal the aggregate Exercise
Price so payable immediately before such record date (or on the date of
such distribution, if applicable).
	 
	(c)	  	Other Distributions. If at any time after the date hereof the Company
distributes to holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any cash,
shares of its capital stock, any evidence of indebtedness or any of its
assets (other than Common Stock), then the number of Warrant Shares for
which this Warrant is exercisable shall be increased to equal: (i) the
number of Warrant Shares for which this Warrant is exercisable immediately
prior to such event, (ii) multiplied by a fraction, (A) the numerator of
which shall be the Fair Market Value (as defined below) per share of
Common Stock on the record date for the dividend or distribution, and (B)
the denominator of which shall be the Fair Market Value price per share of
Common Stock on the record date for the dividend or distribution minus the
amount allocable to one share of Common Stock of the value (as jointly
determined in good faith by the Board of Directors of the Company and the
Warrant holder) of any and all such evidences of indebtedness, shares of
capital stock, other securities or property, so distributed. For purposes
of this Warrant, “Fair Market Value” shall equal the daily volume weighted
average closing trading price of the Common Stock on the Principal Market
(as defined below) for the five (5) Trading Days preceding the date of
determination or, if the Common Stock is not listed or admitted to trading
on any Principal Market, the average of the closing bid and asked prices
on the over-the-counter market as furnished by any New York Stock Exchange
member firm reasonably selected from time to time by the Company for that
purpose and reasonably acceptable to the holder hereof, or, if the Common
Stock is not listed or admitted to trading on the Principal Market or
traded over-the-counter and the average price cannot be determined as
contemplated above, the Fair Market Value of the Common Stock shall be as
reasonably determined in good faith by the Company’s Board of Directors
with the concurrence of the Holder. The Exercise Price shall be reduced
to equal: (i) the Exercise Price in effect immediately before the
occurrence of any event (ii) multiplied by a fraction, (A) the numerator
of which is the number of Warrant Shares for which this Warrant is
exercisable immediately before the adjustment, and (B) the denominator of
which is the number of Warrant Shares for which this Warrant is
exercisable immediately after the adjustment.
	 
	 	  	For purposes of this Warrant, “Principal Market” shall mean the Approved
Market or such other market or exchange on which the Common Stock is then
principally traded.
	 
	(d)	  	Merger, etc. If at any time after the date hereof there shall be a merger
or consolidation of the Company with or into, or a transfer of all or
substantially all of the assets of the Company to, another entity, or a
transaction (by merger or otherwise) in which more than 50% of the
Company’s voting power is transferred, then the Warrant holder shall be
entitled to receive upon or after such transfer, merger or consolidation
becoming effective, and upon payment of the Exercise Price then in effect,
the number of shares or other securities or property of the Company or of
the successor corporation resulting from such merger or consolidation,
which would have been received by the Warrant holder for the shares of
stock subject to this Warrant had this Warrant been exercised just prior
to such transfer, merger or consolidation becoming effective or to the
applicable

6

 

	 	  	record date thereof, as the case may be. The Company will not merge or
consolidate with or into any other corporation, or sell or otherwise
transfer its property, assets and business substantially as an entirety
to another corporation or enter into a transaction transferring more than
50% of the Company’s voting powers, unless the corporation resulting from
such merger or consolidation (if not the Company), or such transferee
corporation, as the case may be, shall expressly assume in writing the
due and punctual performance and observance of each and every covenant
and condition of this Warrant and the Registration Rights Agreement (as
defined in the Agreement) to be performed and observed by the Company.
	 
	(e)	  	Reclassification, etc. If at any time after the date hereof there shall
be a reorganization or reclassification of the securities as to which
purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, then the Warrant
holder shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the
Exercise Price then in effect, the number of shares or other securities or
property resulting from such reorganization or reclassification, which
would have been received by the Warrant holder for the shares of stock
subject to this Warrant had this Warrant at such time been exercised.
	 
	(f)	  	Exercise Price Adjustment. In the event that the Company issues or sells
any Common Stock or securities which are convertible into or exchangeable
for its Common Stock or any convertible securities, or any warrants or
other rights to subscribe for or to purchase or any options for the
purchase of its Common Stock (“Convertible Securities”) or any such
Convertible Securities (other than shares or options issued or which may
be issued pursuant to the Company’s current or future employee or director
option plans provided that the number of shares issuable thereunder does
not exceed 5% of the outstanding shares of Common Stock or shares issued
upon exercise of options, warrants or rights outstanding on the date of
the Loan Agreement) at an effective Exercise Price per share which is less
than the Exercise Price then in effect, then the Exercise Price in effect
immediately prior to such issue or sale or record date, as applicable,
shall be reduced to such lower price.
	 
	 	  	The number of shares which may be purchased hereunder shall be increased
proportionately to any reduction in Exercise Price pursuant to this
paragraph 12(f), so that after such adjustments the aggregate Exercise
Price payable hereunder for the increased number of shares shall be the
same as the aggregate Exercise Price in effect just prior to such
adjustments.
	 
	(g)	  	If:

	       	(i)	  	the Company shall declare a dividend (or any
other distribution) on its Common Stock; or
	 
	       	(ii)	  	the Company shall declare a special nonrecurring
cash dividend on or a redemption of its Common Stock; or

7

 

	       	(iii)	  	the Company shall authorize the granting to all
holders of the Common Stock rights or warrants to subscribe
for or purchase any shares of capital stock of any class or of
any rights; or
	 
	       	(iv)	  	the approval of any stockholders of the Company
shall be required in connection with any reclassification of
the Common Stock of the Company, any consolidation or merger
to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is
converted into other securities, cash or property; or
	 
	       	(v)	  	the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of the
affairs of the Company.

	 	  	then the Company shall cause to be filed at each office or agency
maintained for the purpose of exercise of this Warrant, and shall cause
to the Purchaser at its last address as it shall appear upon the books of
the Company, at least 30 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be
taken, the date as of which the holders of Common Stock of record to be
entitled to such dividend, distributions, redemption, rights or warrants
are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer or share exchange is expected to
become effective or close, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided, however, that the failure to mail such notice
or any defect therein or in the mailing thereof shall not affect the
validity of the corporate action required to be specified in such notice.
	 
	13.	  	Voluntary Adjustment by the Company. The Company may at its option, at
any time during the term of this Warrant, reduce but not increase the then
current Exercise Price to any amount and for any period of time deemed
appropriate by the Board of Directors of the Company. In such event, the
number of Warrant Shares shall be increased proportionately such that the
product of the adjusted Exercise Price and the number of Warrant Shares
shall equal such product prior to the adjustment of the Exercise Price.
	 
	14.	  	Notice of Adjustment. Whenever the number of Warrant Shares or number or
kind of securities or other property purchasable upon the exercise of this
Warrant or the Exercise Price is adjusted, the Company shall promptly mail
to the holder of this Warrant a notice setting forth the number of Warrant
Shares (and other securities or property) purchasable upon the exercise of
this Warrant and the Exercise Price of such Warrant Shares after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.
	 
	15.	  	Authorized Shares. The Company covenants that during the period the
Warrant is outstanding and exercisable, it will reserve from its
authorized and unissued Common Stock a sufficient number of shares to
provide for the issuance of the Warrant Shares

8

 

	 	  	upon the exercise of any purchase rights under this Warrant. The Company
further covenants that its issuance of this Warrant shall constitute full
authority to its officers who are charged with the duty of executing
stock certificates to execute and issue the necessary certificates for
the Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as provided
herein without violation of any applicable law or regulation, or of any
requirements of the American Stock Exchange or, if no longer listed on
the American Stock Exchange, any other domestic securities exchange or
trading market upon which the Common Stock is primarily traded.
	 
	16.	  	Compliance with Securities Laws.
	 
	(a)	  	The holder hereof acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered (or if no exemption from
registration exists), will have restrictions upon resale imposed by state
and federal securities laws. Each certificate representing the Warrant
Shares issued to the holder hereof upon exercise (if not registered or if
no exemption from registration exists) will bear the following legend:
	 
	 	  	THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS.
	 
	(b)	  	Without limiting the Purchaser’s right to transfer, assign or otherwise
convey the Warrant or Warrant Shares in compliance with all applicable
securities laws, the Purchaser, by acceptance hereof, acknowledges that
this Warrant and the Warrant Shares to be issued upon exercise hereof are
being acquired solely for the Purchaser’s own account and not as a nominee
for any other party, and that the Purchaser will not offer, sell or
otherwise dispose of this Warrant or any Warrant Shares to be issued upon
exercise hereof except under circumstances that will not result in a
violation of applicable federal and state securities laws.
	 
	(c)	  	Neither this Warrant nor any Share of Common Stock issued upon exercise
of this Warrant may be offered for sale or sold, or otherwise transferred
or sold in any transaction which would constitute a sale thereof within
the meaning of the Securities Act, unless (i) such security has been
registered for sale under the Securities Act and registered or qualified
under applicable state securities laws relating to the offer an sale of
securities, or (ii) exemptions from the registration requirements of the
Securities Act and the registration or qualification requirements of all
such state securities laws are available and the Company shall have
received an opinion of counsel that the proposed sale or

9

 

	 	  	other disposition of such securities may be effected without registration
under the Securities Act.
	 
	17.	  	Registration Rights. The initial holder of this Warrant is entitled to
the benefit of certain registration rights in respect of the Warrant
Shares as provided in the Registration Rights Agreement.
	 
	18.	  	Replacement Warrants. The Company agrees that within ten (10) Trading
Days after any request from time to time of the Warrant holder, it shall
deliver to such holder a new Warrant in substitution of this Warrant which
is identical in all respects except that the then Exercise Price shall be
appropriately specified in the Warrant, and the Warrant shall specify the
fixed number of Warrant Shares into which this Warrant is then
exercisable. Such changes are intended not as amendments to the Warrant
but only as clarification of the foregoing numbers for convenience
purposes, and such changes shall not affect any provisions concerning
adjustments to the Exercise Price or number of Warrant Shares contained
herein.
	 
	19.	  	Absolute Obligation to Issue Warrant Shares. The Company’s obligations
to issue and deliver Warrant Shares in accordance with the terms hereof
are absolute and unconditional, irrespective of any action or inaction by
the holder hereof to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim,
recoupment, limitation or termination, or any breach or alleged breach by
the holder hereof or any other Person of any obligation to the Company or
any violation or alleged violation of law by the holder or any other
Person, and irrespective of any other circumstance which might otherwise
limit such obligation of the Company to the holder hereof in connection
with the issuance of Warrant Shares. The Company will at no time close
its stockholder books or records in any manner which interferes with the
timely exercise of this Warrant.
	 
	20.	  	Miscellaneous.
	 
	(a)	  	Issue Date; Choice Of Law; Venue; Jurisdiction. THE PROVISIONS OF THIS
WARRANT SHALL BE CONSTRUED AND SHALL BE GIVEN EFFECT IN ALL RESPECTS AS IF
IT HAD BEEN ISSUED AND DELIVERED BY THE COMPANY ON THE DATE HEREOF. THIS
WARRANT SHALL BE BINDING UPON ANY SUCCESSORS OR ASSIGNS OF THE COMPANY.
THIS WARRANT WILL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, EXCEPT FOR MATTERS ARISING
UNDER THE SECURITIES ACT, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF
LAW. EACH OF THE PARTIES CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE
U.S. DISTRICT COURT SITTING IN THE CITY OF NEW YORK IN THE STATE OF NEW
YORK IN CONNECTION WITH ANY DISPUTE ARISING UNDER THIS WARRANT AND HEREBY
WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY OBJECTION, INCLUDING
ANY OBJECTION BASED ON FORUM NON CONVENIENS, TO THE BRINGING OF ANY SUCH
PROCEEDING IN SUCH JURISDICTION. EACH PARTY HEREBY

10

 

	 	  	AGREES THAT IF THE OTHER PARTY TO THIS WARRANT OBTAINS A JUDGMENT AGAINST
IT IN SUCH A PROCEEDING, THE PARTY WHICH OBTAINED SUCH JUDGMENT MAY
ENFORCE SAME BY SUMMARY JUDGMENT IN THE COURTS OF ANY COUNTRY HAVING
JURISDICTION OVER THE PARTY AGAINST WHOM SUCH JUDGMENT WAS OBTAINED, AND
EACH PARTY HEREBY WAIVES ANY DEFENSES AVAILABLE TO IT UNDER LOCAL LAW AND
AGREES TO THE ENFORCEMENT OF SUCH A JUDGMENT. EACH PARTY TO THIS WARRANT
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO SUCH PARTY AT ITS ADDRESS IN ACCORDANCE WITH SECTION 18(C).
NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. EACH PARTY WAIVES ITS RIGHT TO A
TRIAL BY JURY.
	 
	(b)	  	Modification and Waiver. This Warrant and any provisions hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought. Any
amendment effected in accordance with this paragraph shall be binding upon
the Purchaser, each future holder of this Warrant and the Company. No
waivers of, or exceptions to, any term, condition or provision of this
Warrant, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such term, condition or
provision.
	 
	(c)	  	Notices. Any notice, request or other document required or permitted to
be given or delivered to the Purchaser or future holders hereof or the
Company shall be personally delivered or shall be sent by certified or
registered mail, postage prepaid or by an internationally recognized
courier service by overnight or two-day service, to the Purchaser or each
such holder at its address as shown on the books of the Company or to the
Company at the address set forth in the Agreement. All notices under this
Warrant shall be deemed to have been given when received.
	 
	 	  	A party may from time to time change the address to which notices to it
are to be delivered or mailed hereunder by notice in accordance with the
provisions of this Section 20(c).
	 
	(d)	  	Severability. Whenever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of any other provision of
this Warrant in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this
Warrant shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been
contained herein.
	 
	(e)	  	No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue

11

 

	 	  	or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Warrant holder against
impairment. Without limiting the generality of the foregoing, the
Company (a) will not increase the par value of any Warrant Shares above
the amount payable therefore on such exercise, and (b) will take all such
action as may be reasonably necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant.

12

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its officers thereunto duly authorized.

Dated:  October 23, 2002

	 	ISCO INTERNATIONAL, INC.

	 	 	 	 	 
	 
	 	 	
By:	 	/s/ Amr
Abdelmonem
	 	 	 	 	

	 	 	 	 	Name: Amr Abdelmonem, Ph.D.

Title:   Chief Executive Officer

13

 

NOTICE OF EXERCISE

To: ISCO INTERNATIONAL, INC.

(1)  The undersigned hereby elects:

     (A)  to purchase                 shares of Common Stock of ISCO International,
Inc., a Delaware corporation, pursuant to the terms of the attached Warrant,
and tenders herewith payment of the Exercise Price in full, together with all
applicable transfer taxes, if any.

     (B)  in a “cashless” or “net-issue exercise” for, and to purchase
thereunder,                 shares of Common Stock, and herewith makes payment therefore
with                 Surrendered Shares.

(2)  Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:

	 	 	 
	 
	 	 	

	 	 	
(Name)
	 
	 	 	

	 	 	
(Address)
	 
	 	 	

(3)  Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of the undersigned or in such other name as is specified
below:

	 	 	 	 	 
	 	 	
Other Name:	 	 
	 	 	 	 	

	 	 	 
	 
	 
	 	 	

	 	 	
(Name)
	 
	
	 	

	(Date)	 	
(Signature)
	 
	 	 	

	 	 	
(Address)

 

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

     FOR VALUE RECEIVED, the foregoing Warrant of ISCO International, Inc. and
all rights evidenced thereby are hereby assigned to

	 	 	 	 
	

	 	
whose address is	 
	

	 	.
	 
	

	 

	 	 	 	 	 	 	 
	 	 	 	 	Dated:	 	 
	 	 	 	 	 	

	 	 	
Holder’s Signature:	 	 	 	 
	 	 	 	 	
	 
	 	 	
Holder’s Address:	 	 	 	 
	 	 	 	 	
	 
	 	 	 	 	

	 

	 	 	 
	 
	Signature Guaranteed:	 	 
	 	 	

NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in an fiduciary or other representative
capacity should file proper evidence of authority to assign the foregoing
Warrant.

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