AMENDMENT TO LOAN DOCUMENTS
Exhibit
10.1
AMENDMENT
TO
LOAN
DOCUMENTS
AMENDMENT
TO THE LOAN DOCUMENTS (“Agreement”), dated as of June ___, 2007, by and among
Manchester Securities Corporation, a New York corporation (“Manchester”),
Alexander Finance, L.P. an Illinois limited partnership (“Alexander” and
together with Manchester, the “Lenders”), ISCO International , Inc., a Delaware
corporation (the “Company”), Spectral Solutions, Inc., a Colorado corporation
(“Spectral”) and Illinois Superconductor, a Canada corporation, an Ontario
corporation (“ISCO Canada” and together with Spectral, the
“Guarantors”).
W
I T
N E S S E T H
WHEREAS,
pursuant to a certain Third Amended and Restated Loan Agreement, dated as of
November 10, 2004, as amended (the “Loan Agreement”), by and among the Lenders
and the Company, the Lenders have provided loan commitments to the Company
in
the aggregate principal amount of $8,500,000 which are due August 1,
2007;
WHEREAS,
to evidence borrowing made under the Loan Agreement (and its predecessor
agreements), the Company has issued notes (the “Notes”) to the
Lenders;
WHEREAS,
the Notes and certain other obligations have been guaranteed by the Guarantors,
who are subsidiaries of the Company, each such guaranty being made pursuant
to
separate Fourth Amended and Restated Guaranties dated as of June 21, 2006,
as
amended (the “Guaranties”);
WHEREAS,
the Notes and certain other obligations have been secured by the assets of
the
Company and the Guarantors pursuant to a certain Fourth Amended and Restated
Security Agreement, dated as of June 22, 2006, as amended, by and among the
Company, the Lenders and the Guarantors (the “Security Agreement”, and together
with this Agreement, the Loan Agreement, the Notes, and the Guaranties, the
“Loan Documents”);
WHEREAS,
the parties desire that the terms of the Loan Documents be modified by (i)
extending the Maturity Date of the Notes to August 1, 2009, (ii) reducing the
interest rate on the Notes from 9% to 7%, and (iii) provide that all the Notes
will be convertible into shares of the Company’s common stock (“Conversion
Shares”), on the terms and conditions set forth herein;
WHEREAS,
in connection with the entering into this Agreement to the Loan Documents by
the
parties hereto, the Lenders will convert $750,000 in principal amount
outstanding under the Notes each holds into shares of Common Stock (the “Initial
Conversion Shares”) immediately upon execution by the respective parties of this
Agreement to the Loan Documents, the Amended and Restated Notes (as defined
below) and the Registration Rights Agreement (as defined below) at a conversion
price of $0.18 per share, the 10 day volume weighted average closing price
of
the Company’s Common Stock on the American Stock Exchange (“AMEX”) as of June
21, 2007; and
WHEREAS,
pursuant to the Registration Rights Agreement, dated as of the date hereof
and
in the form and such substance of Exhibit A hereto (the “Registration
Rights Agreement”), the Company shall register for resale under the Securities
Act of 1933, as amended (the “Securities Act”), the Initial Conversion Shares
and the Conversion Shares, subject to the terms and conditions set forth in
the
Registration Rights Agreement.
NOW,
THEREFORE, in consideration of the foregoing premises and the covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows (capitalized terms used and not defined herein shall have the meaning
set forth in the Loan Agreement):
1. Amendment
of Notes. Each of the Notes issued under the Loan Agreement shall
be amended and restated in the form of the Amended and Restated Note
(“Amended and Restated Note”) attached hereto as Exhibit B and to
reflect, among other things, the following: (a) the Termination Date and
Maturity Dates (as defined in each of the Notes) for all the Notes shall be
extended from August 1, 2007 to August 1, 2009, (b) the interest rate on each
of
the Notes shall be reduced from 9% to 7% per annum, subject to the terms and
conditions under the Amended and Restated Notes, (c) the aggregate principal
amount outstanding under the Notes held by each Lender immediately prior to
the
execution of this Agreement shall be reduced by $750,000 on account of the
acquisition of the Initial Conversion Shares as set forth in Section 2 below,
and (d) the aggregate principal amount outstanding on each of the Notes,
together with all accrued by unpaid interest thereon, shall be convertible
into
Conversion Shares of the Company on the terms and conditions set forth in the
Amended and Restated Notes. Upon execution of this Agreement and
issuance of the Amended and Restated Notes, all documents and certificates
evidencing the previously issued Notes shall be immediately, and without any
further action on the part of the Company or the Lenders, cancelled and of
no
further force and effect.
2. Conversion
of Notes. Immediately upon execution by the respective parties of
this Agreement and to the Registration Rights Agreement, and the issuance of
the
Amended and Restated Notes, each of the Lenders will convert $750,000 in
principal amount outstanding under the Notes it holds into the Initial
Conversion Shares at a conversion price of $0.18 per share, the 10-day volume
weighted average closing price of the Company’s Common Stock on AMEX as of June
21, 2007.
3. Amendment
of Loan Agreement. The Loan Agreement is hereby amended by
modifying the terms and references to the Original Note, New Note, July 2004
Note and November 2004 Note (all as defined therein) in accordance with this
Agreement.
4. Amendment
of Security Agreement and Guaranties.
(a) The
Security Agreement is hereby amended by modifying the term “Obligations,” as
defined in Section 2 of the Security Agreement, to refer to the Loan Agreement,
2002 Notes, 2003 Notes, July 2004 Notes, November 2004 Notes and Restated
Guaranties (all as defined therein) as modified by this Agreement.
(b) Each
of
the Guaranties is modified such that the definition of “Obligations” in Section
1(a) thereof, is hereby amended to include the Notes, the Loan Agreement and
Security Agreement (as such terms are defined in the Guaranties) as amended
by
this Agreement.
5. Registration
Rights Agreement. The Company and Lenders shall execute and
deliver the Registration Rights Agreement as of the date hereof.
6. Representations;
Warranties and Covenants.
(a) The
Company hereby restates the representations in Section 2.1 of the Loan Agreement
and Section 3 of the Security Agreement, as of the date hereof (other than
the
representation in Section 2.1(g) of the Loan Agreement, which is made as of
the
date of the Loan Agreement). The Guarantors hereby restate their
respective representations in Section 3 of the Security Agreement and Section
8
of the Guaranties, as of the date hereof. The Lenders hereby restate
their representations in Section 2.2 of the Loan Agreement, as of the date
hereof.
(b) The
Company also represents and warrants that:
(i)
Upon
issuance in accordance with this Agreement, the Initial Conversion Shares will
be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes (other than transfer taxes where the Notes have been transferred
and
other than any taxes due because of actions by a Lender), liens and charges
with
respect to the issue thereof and the holders of such Initial Conversion Shares
shall be entitled to all rights and preferences accorded to a holder
of shares of the Company’s common stock.
(ii)
Assuming (without any independent investigation or verification by or on behalf
of the Company) the accuracy of the representations and warranties of the
Lenders set forth in the Loan Agreement, the issuance of the amended and
restated Notes are exempt from registration under Section 5 of the Securities
Act. Neither the Company nor any person acting on its behalf has
taken or will take any action which might subject the offering, issuance or
sale
of the Notes to the registration requirements of Section 5 of the Securities
Act.
(c) The
Company agrees to use its best efforts to obtain within one (1) year from the
date hereof the requisite stockholder and AMEX approvals described in the
Amended and Restated Notes, as well as AMEX’s approval for the listing of the
Initial Conversion Shares on AMEX.
(d) The
Company further agrees that upon obtaining the requisite stockholder and AMEX
approvals described in the Amended and Restated Notes and upon issuance in
accordance with this Agreement, the Loan Agreement, and the terms of the Amended
and Restated Notes, the Conversion Shares into which the Amended and Restated
Notes are convertible will be duly authorized, validly issued, fully paid and
nonassessable and free from all taxes (other than transfer taxes where the
Amended and Restated Notes have been transferred and other than any taxes due
because of actions by a Lender), liens and charges with respect to the issue
thereof and the holders of such Conversion Shares shall be entitled to all
rights and preferences accorded to a holder of shares of the
Company’s Common Stock
7. Stock
Legends. Each Lender agrees to the imprinting, so long as is
required by this Section 5, of the following legend on its Amended and Restated
Notes, the Initial Conversion Shares and Conversion Shares:
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.
The
Initial Conversion Shares and Conversion Shares shall not contain the legend
set
forth above if the issuance thereof occurs at any time while the registration
statement (“Registration Statement”) filed pursuant to the Registration Rights
Agreement is effective under the Securities Act, or in the event that the
Initial Conversion Shares and Conversion Shares may be sold pursuant to Rule
144(k) under the Securities Act. The Company agrees that it will
provide each Lender, upon request, with a certificate or certificates
representing Initial Conversion Shares or Conversion Shares free from such
legend at such time as such legend is no longer required
hereunder. Each Lender agrees that, in connection with any transfer
of Initial Conversion Shares or Conversion Shares by it pursuant to an effective
registration statement under the Securities Act, it will comply with the
prospectus delivery requirements of the Securities Act provided copies of a
current prospectus relating to such effective registration statement are or
have
been supplied to such Lender.
8. Press
Release. The Company and the Lenders shall consult with each
other in issuing any press releases or otherwise making public statements with
respect to the transactions contemplated hereby and neither the Company nor
any
Lender shall issue any such press release or otherwise make any such public
statement without the prior consent of the other, which consent shall not be
unreasonably withheld or delayed, except that no prior consent shall be required
if such disclosure is required by law, in which such case the disclosing party
shall provide the other party with prior notice of such public
statement.
9. Miscellaneous.
(a) As
modified hereby, the Loan Documents shall remain in full force and
effect.
(b) The
Company shall, upon request of the Lenders, reimburse them for their legal
expenses incurred in the preparation of this Agreement and for related
transactions.
[Signature
Page Follows]
JRAPP\120192.6
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6/26/07
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed and
delivered by their respective officers thereunto duly authorized, as of the
date
first above written.
ISCO
INTERNATIONAL, INC.
By:
Name: Xxxx
Xxxxx
Title: Chief
Executive Officer
SPECTRAL
SOLUTIONS, INC.
By:
Name:
Title:
ILLINOIS
SUPERCONDUCTOR CANADA CORPORATION
By:
Name:
Title:
MANCHESTER
SECURITIES CORPORATION
By:
Name: Xxxxxx
Xxxxxxxxx
Title: Vice
President
ALEXANDER
FINANCE, L.P.
By:
Name:
Title:
JRAPP\120192.6
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6/26/07
COLLATERAL
AGENT
UNDER
SECURITY AGREEMENT:
MANCHESTER
SECURITIES CORPORATION
By:
Name: Xxxxxx
Xxxxxxxxx
Title: Vice
President
JRAPP\120192.6
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6/26/07
EXHIBIT
A
REGISTRATION
RIGHTS AGREEMENT
JRAPP\120192.6
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6/26/07
EXHIBIT
B
FORM
OF
AMENDED AND RESTATED NOTE
JRAPP\120192.6
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6/26/07