|
Exhibit
10.6
NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE
SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION 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.
THIS
NOTE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE NOTE IN THE
EVENT OF A PARTIAL REDEMPTION OR CONVERSION. AS A
RESULT, FOLLOWING ANY REDEMPTION OR CONVERSION OF ANY PORTION
OF THIS NOTE, THE OUTSTANDING PRINCIPAL AMOUNT REPRESENTED BY
THIS NOTE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
AMENDED AND RESTATED
7% SENIOR SECURED
CONVERTIBLE NOTE DUE AUGUST 1, 2009
OF
ISCO INTERNATIONAL, INC.
Note
No.: F-5 Current Principal Amount
$1,622,405.00
Original
Issuance Date: October 23, 2002 Elk Grove Village,
Illinois
Amended
& Restated Issuance Date: June 26, 2007
This
AMENDED AND RESTATED Note (“Note”) is one of a
duly authorized issue of notes of ISCO INTERNATIONAL, INC., a
corporation duly organized and existing under the laws of the
State of Delaware (the “Company”), originally
designated as part of the Company's 9½% Secured Grid
Notes due March 31, 2004, as amended from time to time, and is
now amended and restated, with the other notes issued in that
series and other notes issued pursuant to the Loan Agreement
(as defined below), as a 7% Senior Secured Convertible Note
Due August 1, 2009 (“Maturity Date”) of the
Company.
For
Value Received, the Company hereby promises to pay to the
order of ALEXANDER FINANCE L.P. or its registered assigns or
successors-in-interest (“Holder”) the principal
sum of ONE MILLION SIX HUNDRED TWENTY-TWO THOUSAND FOUR
HUNDRED FIVE U.S. DOLLARS AND ZERO CENTS (U.S. $1,622,405.00)
(representing the principal amount outstanding on the New
Issuance Date (as defined below), plus all accrued but unpaid
interest since October 23, 2002), together with all accrued
but unpaid interest thereon, if any, on the Maturity Date, to
the extent such principal amount and interest has not been
converted into the Company's Common Stock, $0.001 par value
per share (the “Common Stock”), in accordance with
the terms hereof. Interest on the unpaid principal
balance hereof shall accrue at the rate of 7% per annum from
the amended and restated issuance date of this Note, June 26,
2007 (the “New Issuance Date”), until the same
becomes due and payable on the Maturity Date, or such earlier
date upon acceleration or by conversion or redemption in
accordance with the terms hereof or of the other Transaction
Documents. Interest on this Note shall accrue daily
commencing on the New Issuance Date, shall be compounded
monthly and shall be computed on the basis of a 360-day year,
30-day months and actual days elapsed and shall be payable in
accordance with Section 1 hereof; provided, however, that
nothing in the foregoing shall be deemed to modify the
calculation of the Principal Amount based on a different rate
of interest applied prior to the New Issuance
Date. Notwithstanding anything contained herein,
this Note shall bear interest on the due and unpaid Principal
Amount from and after the occurrence and during the
continuance of an Event of Default pursuant to Section 5(a),
at the rate (the “Default Rate”) equal to the
lower of twenty percent (20%) per annum or the highest rate
permitted by law. Unless otherwise agreed or
required by applicable law, payments will be applied first to
any unpaid collection costs, then to unpaid interest and fees
(including late charges, if applicable) and any remaining
amount to principal.
Except
as otherwise provided herein, all payments of principal and
interest (including late charges, if applicable) on this Note
shall be made in lawful money of the United States of America
by wire transfer of immediately available funds to such
account as the Holder may from time to time designate by
written notice in accordance with the provisions of this Note
or by Company check. This Note may not be prepaid
in whole or in part except as otherwise provided
herein. Whenever any amount expressed to be due by
the terms of this Note is due on any day which is not a
Business Day (as defined below), the same shall instead be due
on the next succeeding day which is a Business
Day.
Capitalized
terms used herein and not otherwise defined shall have the
meanings set forth in the Amendment Agreement dated on or
about the New Issuance Date pursuant to which this Note was
issued (the “Amendment Agreement”). For purposes
hereof the following terms shall have the meanings ascribed to
them below:
“Business
Day” shall mean any day other than a Saturday, Sunday or
a day on which commercial banks in the City of New York are
authorized or required by law or executive order to remain
closed.
“Change
in Control Transaction” will be deemed to exist if (i)
there occurs any consolidation, merger or other business
combination of the Company with or into any other corporation
or other entity or person (whether or not the Company is the
surviving corporation), or any other corporate reorganization
or transaction or series of related transactions in which in
any of such events the voting stockholders of the Company
prior to such event cease to own 50% or more of the voting
stock, or corresponding voting equity interests, of the
surviving corporation after such event (including without
limitation any “going private” transaction under
Rule 13e-3 promulgated pursuant to the Exchange Act (as
defined below) or tender offer by the Company under Rule 13e-4
promulgated pursuant to the Exchange Act for 20% or more of
the Company's Common Stock), (ii) any person (as defined in
Section 13(d) of the Exchange Act), together with its
affiliates and associates (as such terms are defined in Rule
405 under the Securities Act), beneficially owns or is deemed
to beneficially own (as described in Rule 13d-3 under the
Exchange Act without regard to the 60-day exercise period) in
excess of 50% of the Company's voting power, (iii) there is a
replacement of more than one-half of the members of the
Company’s Board of Directors which is not approved by
those individuals who are members of the Company's Board of
Directors on the date thereof, or (iv) in one or a series of
related transactions, there is a sale or transfer of all or
substantially all of the assets of the Company, determined on
a consolidated basis, or (v) the execution by the Company of
an agreement to which the Company is a party or which it is
bound providing for an event set forth in (i), (ii), (iii) or
(iv) above.
“Conversion
Ratio” means, at any time, a fraction, of which the
numerator is the entire outstanding Principal Amount of this
Note (or such portion thereof that is being redeemed or
repurchased), and of which the denominator is the then
applicable Conversion Price.
“Conversion
Price” shall equal $0.20 (which Conversion Price shall
be subject to adjustment as set forth herein).
“Conversion
Shares” means the shares of Common Stock into which the
Notes are convertible (including repayment in Common Stock as
set forth herein) in accordance with the terms hereof and the
Amendment Agreement and Loan Agreement.
“Convertible
Securities” means any convertible securities, warrants,
options or other rights to subscribe for or to purchase or
exchange for, shares of Common Stock.
“Debt”
shall mean indebtedness of any kind.
“Effective
Date” means the date on which a Registration Statement
covering all the Conversion Shares and other Registrable
Securities (as defined in the Registration Rights Agreement)
is declared effective by the Securities and Exchange
Commission.
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
“Fair
Market Price” shall mean the closing price (or closing
bid price) for the Common Stock on the Trading Day immediately
preceding the date on which the price is being
determined.
“Loan
Agreement” shall mean the Third Amended and Restated
Loan Agreement, dated as of November 10, 2004, as amended, by
and among the Company, Manchester Securities Corporation and
Alexander Finance, L.P.
“Market
Price” shall equal 90% of the average of the VWAP for
each of the twenty (20) Trading Days, excluding the five (5)
highest Trading Days (i.e. the Trading Days with
the highest VWAP) from the average, immediately preceding the
date on which such Market Price is being
determined.
“MFN
Transaction” shall mean a transaction in which the
Company issues or sells any securities in a capital raising
transaction or series of related transactions (the “MFN
Offering”) which grants to the investor (the “MFN
Investor”) the right to receive additional securities
based upon future capital raising transactions of the Company
on terms more favorable than those granted to the MFN Investor
in the MFN Offering.
“Per
Share Selling Price” shall include the amount actually
paid by third parties for each share of Common Stock in a sale
or issuance by the Company. In the event a fee is
paid by the Company in connection with such transaction
directly or indirectly to such third party or its affiliates,
any such fee shall be deducted from the selling price pro rata
to all shares sold in the transaction to arrive at the Per
Share Selling Price. A sale of shares of Common
Stock shall include the sale or issuance of rights, options,
warrants or convertible, exchangeable or exercisable
securities, issued or sold on or subsequent to the Closing
Date, under which the Company is or may become obligated to
issue shares of Common Stock, and in such circumstances the
Per Share Selling Price of the Common Stock covered thereby
shall also include the exercise, exchange or conversion price
thereof (in addition to the consideration received by the
Company upon such sale or issuance less the fee amount as
provided above). In case of any such security
issued or sold on or subsequent to the Closing Date in an MFN
Transaction, the Per Share Selling Price shall be deemed to be
the lowest conversion or exercise price at which such
securities are converted or exercised, or the lowest
adjustment price in the case of an MFN Transaction, over the
life of such securities. If shares are issued for a
consideration other than cash, the Per Share Selling Price
shall be the fair value of such consideration as determined in
good faith by independent certified public accountants
mutually acceptable to the Company and the
Purchaser. In the event the Company directly or
indirectly effectively reduces the conversion, exercise or
exchange price for any Convertible Securities issued or sold
on or subsequent to the Closing Date which are currently
outstanding (other than pursuant to the terms of the
transaction documentation for such securities as in effect on
the date hereof), then the Per Share Selling Price shall equal
such effectively reduced conversion, exercise or exchange
price.
“Principal
Amount” shall refer to the sum of (i) the original
principal amount of this Note, (ii) all accrued but unpaid
interest hereunder, and (iii) any default payments owing under
the Transaction Documents but not previously paid or added to
the Principal Amount.
“Principal
Market” shall mean the American Stock Exchange or such
other principal market or exchange on which the Common Stock
is then listed for trading.
“Redemption
Date” shall mean the date on which the Company has
elected to redeem this Note pursuant to Section 1(c)
below.
“Registration
Statement” shall have the meaning set forth in the
Registration Rights Agreement.
“Securities
Act” shall mean the Securities Act of 1933, as
amended.
“Trading
Day” shall mean (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.
“VWAP”
shall mean the daily volume weighted average price of the
Common Stock on the Principal Market as reported by Bloomberg
Financial L.P. (based on a trading day from 9:30 a.m. Eastern
Time to 4:00 p.m. Eastern Time) using the AQR function on the
date in question.
The
following terms and conditions shall apply to this
Note:
Section 1.
Payments of Principal and Interest .
(a)
Interest . Subject to Section 3(i) below, this Note
shall accrue interest at a rate of 7% per annum daily commencing on
the New Issuance Date, shall be compounded monthly and shall be
computed on the basis of a 360-day year, 30-day months and actual
days elapsed. Accrued interest shall be added to the
Principal Amount of this Note.
(b)
Payment of Principal. Subject to the provisions
hereof, the Principal Amount of this Note shall be due and payable
in cash on the Maturity Date.
(c)
Redemption Right of Company . Beginning on the two
(2) year anniversary of the New Issuance Date, the Company shall
have the right to redeem this Note in full (but not less than full)
in cash upon delivering notice in writing sixty (60) days prior to
such Redemption Date. Nothing in this Section 1(c) shall
prohibit the Holder from converting this Note prior to the
Redemption Date.
Section 2.
Seniority . The obligations of the Company hereunder
shall rank pari passu to the Company’s notes issued under and
governed by the Loan Agreement and the Securities Purchase
Agreement, dated as of June 22, 2006, by and among the Company and
the Holder and Alexander Finance, L.P. (the “Purchase
Agreement”), and shall be senior to the Company’s
unsecured indebtedness.
Section 3.
Conversion .
(a)
Conversion by Holder . Subject to the terms hereof
and restrictions and limitations contained herein, the Holder shall
have the right, at such Holder's option, at any time and from time
to time to convert the outstanding Principal Amount under this Note
in whole or in part by delivering to the Company a fully executed
notice of conversion in the form of conversion notice attached
hereto as Exhibit A (the “Conversion Notice”),
which may be transmitted by facsimile or electronic
transmission (with the original mailed on the same day be certified
or registered mail, postage prepaid and return receipt requested),
on the date of conversion (the “Conversion
Date”). A Conversion Notice shall be deemed sent
on the date of delivery if delivered before 5:00 p.m. Eastern
Standard Time on such date, or the day following such date if
delivered after 5:00 p.m. Eastern Standard
Time. Notwithstanding anything to the contrary herein,
this Note and the outstanding Principal Amount hereunder shall not
be convertible into Common Stock to the extent that such conversion
would result in the Holder hereof exceeding the limitations
contained in, or otherwise violating the provisions of Section 3(i)
below.
(b)
Conversion Date Procedures . Upon conversion of this
Note pursuant to this Section 3, the outstanding Principal Amount
hereunder shall be converted into such number of fully paid,
validly issued and non-assessable shares of Common Stock, free of
any liens, claims and encumbrances, as is determined by dividing
the outstanding Principal Amount (and, at the election of the
Holder, any accrued interest or applicable late charges) being
converted by the then applicable Conversion Price. If a
conversion under this Note cannot be effected in full for any
reason, or if the Holder is converting less than all of the
outstanding Principal Amount hereunder pursuant to a Conversion
Notice, the Company shall, upon request by the Holder, promptly
deliver to the Holder (but no later than five Trading Days after
the Conversion Date) a Note for such outstanding Principal Amount
(and, at the election of the Holder, any accrued interest or
applicable late charges) as has not been converted if this Note has
been surrendered to the Company for partial
conversion. The Holder shall not be required to
physically surrender this Note to the Company upon any conversion
hereunder unless the full outstanding Principal Amount (and, at the
election of the Holder, any accrued interest or applicable late
charges) represented by this Note is being converted or
repaid. The Holder and the Company shall maintain
records showing the outstanding Principal Amount (and, at the
election of the Holder, any accrued interest or applicable late
charges) so converted and repaid and the dates of such conversions
or repayments or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require
physical surrender of this Note upon each such conversion or
repayment.
(i)
Stock Certificates or DWAC . The Company will
deliver to the Holder not later than three (3) Trading Days after
the Conversion Date, a certificate or certificates which shall be
free of restrictive legends and trading restrictions (assuming that
the Registration Statement has been declared effective),
representing the number of shares of Common Stock being acquired
upon the conversion of this Note. In lieu of delivering
physical certificates representing the shares of Common Stock
issuable upon conversion of this Note, provided the Company's
transfer agent is participating in the Depository Trust Company
(“DTC”) Fast Automated Securities Transfer
(“FAST”) program, upon request of the Holder, the
Company shall use commercially reasonable efforts to cause its
transfer agent to electronically transmit such shares issuable upon
conversion to the Holder (or its designee), by crediting the
account of the Holder’s (or such designee’s) prime
broker with DTC through its Deposit Withdrawal Agent Commission
system (provided that the same time periods herein as for stock
certificates shall apply). If in the case of any
conversion hereunder, such certificate or certificates are not
delivered to or as directed by the Holder by the third Trading Day
after the Conversion Date, the Holder shall be entitled by written
notice to the Company at any time on or before its receipt of such
certificate or certificates thereafter, to rescind such conversion,
in which event the Company shall immediately return this Note
tendered for conversion.
(c)
Conversion Price Adjustments .
(i)
Stock
Dividends and Splits. If the Company or any of its
subsidiaries, at any time while the Notes are outstanding (A) shall
pay a stock dividend or otherwise make a distribution or
distributions on any equity securities (including instruments or
securities convertible into or exchangeable for such equity
securities) in shares of Common Stock, or (B) subdivide outstanding
Common Stock into a larger number of shares, then the applicable
then Conversion Price shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock
outstanding before such event and the denominator of which shall be
the number of shares of Common Stock outstanding after such
event. Any adjustment made pursuant to this Section
3(c)(i) shall become effective immediately after the record date
for the determination of stockholders entitled to receive such
dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision.
(ii)
Distributions. If
the Company or any of its subsidiaries, at any time while the Notes
are outstanding, shall distribute to all holders of Common Stock
evidences of its indebtedness or assets or cash or rights or
warrants to subscribe for or purchase any security of the Company
or any of its subsidiaries (excluding those referred to in Section
3(c)(i) above), then concurrently with such distributions to
holders of Common Stock, the Company shall distribute to holders of
the Notes the amount of such indebtedness, assets, cash or rights
or warrants which the holders of the Notes would have received had
the Notes been converted into Common Stock.
(iii)
Common
Stock Issuances. In the event that the Company or any of
its subsidiaries on or subsequent to the date of the Amendment
Agreement (A) issues or sells any securities which are convertible
into or exercisable or exchangeable for Common Stock (other than
Notes issued under the Loan Agreement or Purchase Agreement or
shares or options issued or which may be issued pursuant to the
Company’s 2003 Equity Incentive Plan, as amended (the
“Incentive Plan”), up to the Incentive Plan Limit (as
defined below)), or any warrants or other rights to
subs
| 
