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EXHIBIT 10-B
Xxxxxxx Associates, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Westgate International, L.P.
c/o Stonington Management Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Alexander Finance, L.P.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
November 5, 1999
Illinois Superconductor Corporation
000 Xxxxxxxx Xxxxx
Xx. Xxxxxxxx, Xxxxxxxx 00000
RE: MODIFICATION OF COVENANTS
Ladies and Gentlemen:
Reference is made to the Securities Purchase Agreement, dated
as of March 31, 1999, by and among you (the "Company"), the undersigned, and
State Farm Mutual Automobile Insurance Company ("State Farm") (the "6% Note
Agreement") and the Notes issued thereunder, (the "6% Notes") and the Securities
Purchase Agreement, dated as of May 15, 1998, by and among the Company, the
undersigned, State Farm, Spring Point Partners, L.P. and Spring Point Offshore
Fund (the "2% Note Agreement").
In consideration of the mutual covenants contained in this
Agreement, the Company and the undersigned hereby agree as follows:
1. Modification of Covenants.
(a) The undersigned, representing 75% or more of the principal amount of
the Transaction Notes (as defined in the 6% Note Agreement) and the Company
hereby agree that Section 3.22 of the 6% Note Agreement is hereby amended
such that all references to the year 2000 set forth therein shall instead
refer to the year 2001 and that the definition of "Operating Income" in
Section 3.22(c) shall be modified such that the words "operating income" on
the first line thereof shall be amended to "consolidated operating income";
it being understood that such amendment shall apply not only to such
provisions in the 6% Note Agreement but also to the cross-references thereof
contained in the 6% Notes and Amended 2% Notes (as defined in the 6% Note
Agreement); provided, however, that this provision shall become effective
only after the undersigned's designees have been appointed to the Board
pursuant to Section 4(a) of the New Investment Agreement (as defined below).
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(b) The undersigned and the Company also agree that Section 3.15(a) of the
6% Note Agreement and Section 3.17(a) of the 2% Note Agreement shall be
amended to read as follows:
"(a) Directly or indirectly create, incur, assume,
guarantee, or otherwise become or remain directly or
indirectly liable with respect to, any indebtedness
of any kind, other than (i) indebtedness under any
"Notes" (as defined in the letter agreement captioned
"Additional Investment", dated as of the date hereof
(the "New Investment Agreement") by and among the
Company, Xxxxxxx Associates, LP, Westgate
International, LP and Alexander Finance, LP (the "New
Investors")), including without limitation, the Notes
issued on May 15, 1998, to Spring Point Partners, LP
and Spring Point Offshore Fund, whether or not such
Notes are held by New Investors; and (ii) any
indebtedness incurred to the New Investors pursuant
to the right to provide additional financing pursuant
to an option under the New Investment Agreement;
(iii) amounts pursuant to the terms of a Factoring
Agreement, dated as of October 6, 1999 by and between
the Company and Franklin Capital Corporation (the
"Factoring Agreement"), provided that (A) the Company
will terminate the Factoring Agreement not later than
its initial 12 month term, pursuant to Section 11.1.1
thereunder and (B) the Company will not hereafter
request any further advances under Section 2.7 of the
Factoring Agreement without the prior written consent
of New Investors holding a majority in principal
amount of the outstanding notes of the Company issued
to the New Investors; or (iv) indebtedness to trade
creditors in the ordinary course of business."
2. Business Combination. The undersigned and the Company hereby agree that for
purposes of any "Notes" (as defined in the New Investment Agreement), the
sale and amendment of securities pursuant to the New Investment Agreement
and the provisions regarding directors of the Company thereunder do not
constitute a "Business Combination".
3. Governing Law. This Agreement shall be governed by the internal laws of the
State of New York.
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Please indicate your acceptance and agreement of the terms
contained herein by countersigning this Agreement and returning a signed copy to
the undersigned.
Sincerely,
XXXXXXX ASSOCIATES, L.P.
By:
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WESTGATE INTERNATIONAL, L.P.
By: Martley International, Inc.
Attorney-in-Fact
By:
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ALEXANDER FINANCE, L.P.
By:
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AGREED TO AND ACCEPTED
ILLINOIS SUPERCONDUCTOR CORPORATION
By:
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