ex101.htm

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]

     


    
      
          

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    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:                 John
      Thode

    Title:                 Chief
      Executive Officer

    


    SPECTRAL
      SOLUTIONS, INC.

    


    


    By:                                                                

    Name:

    Title:

    


    ILLINOIS
      SUPERCONDUCTOR CANADA CORPORATION

    


    


    By:                                                                

    Name:

    Title:

    


    MANCHESTER
      SECURITIES CORPORATION

    


    


    By:                                                                

    Name:                 Elliot
      Greenberg

    Title:                 Vice
      President

    


    


    ALEXANDER
      FINANCE, L.P.

    


    


    By:                                                                

    Name:

    Title:

    


    



    
      
                    

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    COLLATERAL
      AGENT

    UNDER
      SECURITY AGREEMENT:

    


    MANCHESTER
      SECURITIES CORPORATION

    


    


    By:                                                                

    Name:                 Elliot
      Greenberg

    Title:                 Vice
      President


    
      
                                                           

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    EXHIBIT
      A

    


    REGISTRATION
      RIGHTS AGREEMENT


    
      
              

                           

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    EXHIBIT
      B

    


    FORM
      OF
      AMENDED AND RESTATED NOTE

    


    



    
      
                    

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