Document:

Third Amended and Restated Loan Agreement

 Exhibit 10.1 
  
 THIRD AMENDED AND RESTATED LOAN AGREEMENT 
  
 THIRD AMENDED AND RESTATED LOAN AGREEMENT (“Agreement”) dated as of November 10, 2004 (the
“Closing Date”) 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”) and ISCO International, Inc., a corporation organized and existing under the laws of Delaware and formerly known as Illinois Superconductor Corporation (the “Company”). 
  
 W I T N E S S E
T H: 
  
 WHEREAS, the
Lenders and the Company have entered into a Loan Agreement, dated as of October 23, 2002 (the “Original Loan Agreement”) pursuant to which, among other things: (i) the Lenders provided aggregate loan commitments to the Company of up
to $4,000,000; (ii) warrants to purchase common stock of the Company were to be issued concurrently with advances under the Original Loan Agreement; and (iii) interest on loans thereunder bore interest at the rate of 91⁄2% per annum; and

  
 WHEREAS, the Lenders and the Company
amended and restated the terms of the Original Loan Agreement (as so amended, the “First Amended and Restated Loan Agreement”) to reflect: (i) an increase in the aggregate commitment of the Lenders to $6,000,000; (ii) the
elimination of warrant issuances from future loans; (iii) that future loans will bear interest at the rate of 14% per annum; (iv) that future loans mature on October 31, 2004; (v) that such future loans be subject to the discretion of the Lenders
and (vi) such other matters as are set forth therein; and 
  
 WHEREAS, the Company and the Lenders, pursuant to an Amendment to Loan Documents, dated as of February 24, 2004 (the “Amendment Agreement”) amended the terms of the First Amended and Restated Loan
Agreement as follows: (i) extending the maturity dates of the notes issues pursuant to the Original Loan Agreement and the notes issued pursuant to the First Amended and Restated Loan Agreement to April 1, 2005; and (ii) commencing on March 31,
2004, interest accruing on such notes shall be at the rate of 14% per annum; and 
  
 WHEREAS, the Lenders and the Company amended and restated the terms of the First Amended and Restated Loan Agreement (the “Second Amended and Restated Loan Agreement”) to reflect
an increase in the aggregate commitment of the Lenders to $6,500,000; and 
  
 WHEREAS, the Company and the Lenders desire that the aggregate loan commitments of the Lenders to the Company hereunder now be increased from $6,500,000 to $8,500,000; and 
  
 WHEREAS, the Company and the Lenders desire that the
amounts borrowed hereunder (the “Loans”, which as used hereunder shall include all loans advanced under the Original Loan Agreement, the First Amended and Restated Loan Agreement, the 

 Second Amended and Restated Loan Agreement and this Agreement) but after the date hereof with respect to the increase in
the Commitments set forth in Section 1.1 below, be evidenced by secured grid notes, having the rights and privileges set forth in the notes in the form and substance of Exhibit A in the aggregate principal amount of $2,000,000 (the
“November 2004 Notes”) hereto and which will be secured by all of the assets of the Company and its subsidiaries pursuant to a Third Amended and Restated Security Agreement in the form and substance of Exhibit B hereto (the
“Security Agreement”); 
  
 WHEREAS, pursuant to the Third Amended and Restated Guaranties in favor of the Lenders dated the date hereof and each in the form and substance of Exhibit C hereto (together, the “Guaranties”),
the Company’s subsidiaries, Spectral Solutions, Inc., a Colorado corporation and Illinois Superconductor Canada Corporation (the “Guarantors”) will guaranty the Company’s obligations under this Agreement, the Security
Agreement and the November 2004 Notes, the Original Notes (as defined below), the New Notes (as defined below) and the July 2004 Notes (as defined below). 
  
 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: 
  
 ARTICLE 1 
  
 AMOUNT AND TERMS OF LOANS 
  
 Section 1.1 The Advances; Commitment. Each Lender severally and further subject to such Lender’s sole and absolute discretion and not jointly with the other Lender, agrees, on the terms and conditions
hereinafter set forth, to make advances (“Advances”) to the Company from time to time on any Business Day (as defined below) during the period commencing on the date hereof and terminating on April 1, 2005 (the “Termination
Date”). Any such Advances by a Lender shall be in an aggregate amount outstanding not to exceed at any time such Lender’s Commitment; provided, however, that the aggregate amount available to be borrowed under the
“Commitments” shall not exceed $8,500,000. The aggregate Commitments of the Lenders are set forth on Schedule A hereto. Within the limits of each Lender’s Commitment in effect from time to time, and subject to both the Lenders’
discretion (as referred to above) and the terms and conditions set forth above, the Company may borrow under this Section 1.1. The Loans shall be evidenced by the Notes (as defined below), which in turn are guaranteed by the Guaranties and secured
pursuant to the Security Agreement. 
  
 As used herein,
“Business Day” shall mean any day other than a Saturday, Sunday or other day on which commercial banks in New York City are required or authorized to close. 
  
 Section 1.2 The November 2004 Loan. Lenders shall, by the end of the Business Day immediately following the execution
of this Third Amended and Restated Agreement make a Loan to the Company in the aggregate amount of one million dollars ($1,000,000) (the “November 2004 Loan”), without any prior Borrowing Request (as 
  

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 defined below); provided, however, that the relative Commitments of the Lenders with respect to the November 2004 Loan
shall be Alexander, $550,000 and Manchester, $450,000. 
  
 Section
1.3 Making the Advances. 
  
 (a) Each set of Advances made
by the Lenders (a “Borrowing”) after the date hereof other than the November 2004 Loan, shall be made on notice (a “Borrowing Request”), given not later than 11:00 A.M. (New York City time) on the first or fifteenth
day of the month, by the Company to the Lenders, which date shall be five (5) Business Days prior to the date of the proposed Borrowing. Each Borrowing Request shall be by telecopier and email, in substantially the form of Exhibit G hereto,
specifying therein the requested (i) date of such Borrowing and (ii) aggregate amount of such Borrowing. The amount of such Borrowing shall be at least $250,000 (or less only if such amount is the balance of the Advances available under the Notes at
such time). In the event that no Default (as defined below) or Event of Default (as defined in the Notes) shall have occurred and be continuing and all conditions to a Borrowing (including those set forth in Article III) shall have been satisfied
and each Lender, in its sole and absolute discretion, shall have deemed it advisable to make the requested Advance, then the Company shall be entitled to make Borrowings under the Financing Documents (as defined below). 
  
 (b) Notwithstanding the foregoing, no Loan shall be made unless both Lenders
shall have agreed to fund their respective Advances. If either Lender does not agree to make its Advance, then the other shall not make its Advance. 
  
 (c) The aggregate indebtedness of the Company hereunder to each Lender shall be evidenced by: (i) the existing note, dated as of October 23, 2002, issued
to such Lender under the Original Loan Agreement (an “Original Note”); (ii) the existing note, dated as of October 24, 2003, issued to such Lender under the First Amended and Restated Agreement (a “New Note”); (iii)
the existing note, dated as of July 23, 2004, issued to such Lender under the Second Amended and Restated Agreement (the “July 2004 Note”), and (iv) a November 2004 Note (the Original Notes, the New Notes, the July 2004 Notes and
the November 2004 Notes shall be collectively referred to as “Notes”). 
  
 Section 1.4 Repayment. On April 1, 2005, the Termination Date, the Company shall repay to the Lenders the outstanding principal amount of the Advances evidenced by the Notes, together with (a) all accrued
interest (such interest accruing whether or not allowable under any applicable bankruptcy laws after a bankruptcy filing by the Company) and (b) all other amounts due under the Loan Documents (as defined below); provided however, that any Event of
Default under an Original Note, New Note, July 2004 Note or November 2004 Note shall be an Event of Default with respect to any of the other Notes. Upon any of the Company’s obligations hereunder or under the other Loan Documents (as defined in
Section 4.1 below) becoming due and payable (by acceleration or otherwise), the Lenders shall be entitled to immediate payment of such obligations. 
  

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 Section 1.5 Termination of the Commitments. On the Termination Date the Commitments of the Lenders
shall be terminated in whole and the Notes shall be due and payable in their entirety. 
  
 Section 1.6 Prepayments. 
  
 (a) Optional. The Company may, upon 30 days’ prior written notice to the Lenders, which notice shall state the proposed date and aggregate principal amount of any proposed prepayment, prepay outstanding amounts under the Loans,
provided that the minimum amount of such prepayment shall be $250,000 (or lesser amount only if such amount is the total principal amount of Notes outstanding at such time) and if such notice is given the Company shall prepay on the proposed
repayment date such proposed prepayment amount, together with accrued interest to the date of such prepayment on the principal amount prepaid. 
  
 (b) Mandatory. (i) The Company shall, on the date of receipt of cash proceeds (net of reasonable legal expenses and taxes payable as a result of
such transaction) from (X) the sale, lease, transfer or other disposition of any assets of the Company, any Guarantor, or any affiliate of the Company or Guarantor other than in the ordinary course of the Company’s or the Guarantor’s
business, consistent with past practices, (Y) the incurrence or issuance by the Company, any Guarantor, or any affiliate of the Company or Guarantor of any debt to parties other than the Lenders, (Z) the sale or issuance by the Company, any
Guarantor, or any affiliate of the Company or any Guarantor of any capital stock (including, without limitation, preferred stock) or any warrants, rights or options to acquire capital stock, or any other securities other than upon the exercise of
outstanding options and warrants or the issuance of options pursuant to the Company’s stock option plan, provided that the number of shares of Common Stock issuable thereunder does not exceed 5% of the outstanding shares of Common Stock, (AA)
the receipt by the Company, any Guarantor or any affiliate of the Company or any Guarantor, of any judgment, award or settlement, or (BB) a merger or share exchange pursuant to which 50% of the Company’s voting power is transferred, prepay an
aggregate amount of the Loans equal to the lesser of (a) the amount of outstanding Loans and (b) the amount of such net cash proceeds. 
  
 (c) Application of Prepayments. Any payments or prepayments by the Company or any Guarantor permitted or required hereunder shall be applied to
each Lender, pro rata in relation to the total amount then outstanding under the Loan Documents, in the following order: first, to the payment of any fees, costs, expenses, or charges of the Lenders arising under the Loan Documents, second, to the
payment of interest accrued on the outstanding Advances represented by the November 2004 Notes, third, to the payment of the principal amount of the outstanding Advances represented by the November 2004 Notes, fourth, to the payment of interest
accrued on the outstanding Advances represented by the July Notes; fifth, to the payment of the principal amount of the outstanding Advances represented by the July Notes, sixth, to the payment of interest accrued on outstanding Advances represented
by the New Notes and seventh, to the payment of the principal amount of the outstanding Advances represented by the New Notes, eighth, to the payment of interest accrued on outstanding Advances represented by 
  

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 the Original Notes and ninth, to the payment of the principal amount of the outstanding Advances represented by the
Original Notes. Any prepayments, whether optional or mandatory, shall permanently reduce the Lenders’ Commitments, pro rata, to the extent of such prepayments. 
  
 Section 1.7 Interest. Interest shall accrue on the Advances as set forth in the Notes, except that with respect to
the Original Notes, commencing on March 31, 2004, interest shall accrue at the rate of the lesser of 14% per annum or the highest rate permitted by law and shall otherwise be calculated as set forth in the Original Notes. 
  
 Section 1.8 Payments and Computations. 
  
 (a) The Company shall make each payment hereunder and under the Notes not
later than 3 P.M. (New York City time) on the day when due, in U.S. dollars, to the Lenders at accounts designated by the Lenders to the Company. 
  
 (b) All computations of interest, fees, and charges shall be made by the Lenders on the basis of a year of 360 days, in each case for the actual number of
days (including the first day but excluding the last day) occurring in the period for which such interest, fees, or charges are payable. Each determination by the Lenders of an interest rate, fee, or charge hereunder shall be conclusive and binding
for all purposes, absent manifest error. 
  
 (c) Whenever any
payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the
payment of interest or fees, as the case may be. 
  
 Section 1.9
Financing Documents. Concurrently with the execution and delivery of this Agreement and the November 2004 Notes, the Company is delivering to the Lenders the following additional documents, each dated as of the date hereof, the execution and
delivery of which are a condition to the Lenders’ Commitments set forth in Section 1.1(a) above: 
  
 (i) the Guaranties; 
  
 (ii) the Security Agreement; 
  
 (iii) Amendments (the “UCC Amendments”) to UCC financing statements, naming Lenders as the secured parties and the
Company as the debtor (the “UCC Financing Statements” and together with the UCC Amendments, the “Amended UCC Financing Statements”) if required by Lenders; 
  
 (iv) Amendments (the “PTO Amendments”) to
Patent and Trademark financing statements naming the Lenders as secured parties and the Company as the debtor (the “Patent and Trademark Financing Statements” and together with the PTO Amendments, the “Amended Patent and
Trademark Statements”) if required by Lenders; 
  

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 (v) Legal Opinion of outside counsel to the Company, in the form of Exhibit F
hereto delivered not later than five (5) Business after the date hereof. 
  
 (vi) Secretary’s Certificate and Incumbency Certificate; and 
  
 (vii) UCC Lien Searches 
  
 It shall be an Event of Default under the Notes if the legal opinion referred to in clause (v) above is not delivered within five (5) Business Days of the
date hereof. 
  
 Section 1.10 This Agreement, the Guaranties, the
Security Agreement, the November 2004 Notes, the Amended UCC Financing Statements and the Amended Patent and Trademark Financing Statements are collectively referred to herein as the “Financing Documents.” 
  
 ARTICLE 2 
  
 REPRESENTATIONS AND WARRANTIES 
  
 Section 2.1 Representations, Warranties and Agreements of the Company.
The Company hereby makes the following representations and warranties to the Lenders as of the date hereof: 
  
 (a) Organization and Qualification. The Company is a corporation, duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. The Company has no subsidiaries other than the Guarantors. The Company is duly
qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or
in good standing, as the case may be, could not, individually or in the aggregate, (x) adversely affect the legality, validity or enforceability of any of the Loan Documents in any material respect, (y) have a material adverse effect on the results
of operations, assets, or financial condition of the Company or (z) adversely impair in any material respect the Company’s ability to perform fully on a timely basis its obligations under the Loan Documents (a “Material Adverse
Effect”). 
  
 (b) Authorization; Enforcement. The
Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by the Financing Documents, and otherwise to carry out its obligations thereunder. The execution and delivery of each of the
Financing Documents by the Company and the consummation by it of the transactions contemplated thereby, have been duly authorized by all requisite corporate action on the part of the Company. Each 
  

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 of the Financing Documents has been duly executed and delivered by the Company and constitutes the valid and binding
obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. 
  
 (c) Capitalization. The authorized, issued and outstanding capital stock of the Company is set forth in Schedule 2.1(c). No shares of Common Stock
are entitled to preemptive or similar rights, nor is any holder of the Common Stock entitled to preemptive or similar rights arising out of any agreement or understanding with the Company by virtue of any of the Financing Documents. Except as
disclosed in Schedule 2.1(c), there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, securities, rights or obligations convertible into or exchangeable for, or giving
any person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of Common Stock, or securities or rights
convertible or exchangeable into shares of Common Stock. 
  
 (d) [Intentionally Omitted.] 
  
 (e)
No Conflicts. The execution, delivery and performance of the Financing Documents by the Company and the consummation by the Company of the transactions contemplated thereby, do not and will not (i) conflict with or violate any provision of
its Certificate of Incorporation or By-laws or (ii) conflict with, constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to
which the Company is subject (including Federal and state securities laws and regulations), or by which any material property or asset of the Company is bound or affected, except in the case of each of clauses (ii) and (iii), such conflicts,
defaults, terminations, amendments, accelerations, cancellations and violations as could not, individually or in the aggregate, have or result in a Material Adverse Effect. The business of the Company is not being conducted in violation of any law,
ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate, do not have a Material Adverse Effect. 
  
 (f) Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, or make any filing or
registration with, any court or other federal, state, local or other governmental authority or other person in connection with the execution, delivery and performance by the Company of the Financing Documents other than: (i) the filing of the
Amendments to the UCC and Patent and Trademark Financing Statements if any are required by Lenders; and (ii) in all other cases, where the failure to obtain such consent, waiver, authorization or order, or to give or make such notice or filing,
would not materially impair or delay the ability of the 
  

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 Company to effect the transactions contemplated by this Agreement free and clear of all liens and encumbrances of any
nature whatsoever or would not otherwise have a Material Adverse Effect (the approvals referred to in clause (i) are hereinafter referred to as the “Required Approvals”). The Company has no reason to believe that it will be unable
to obtain the Required Approvals. 
  
 (g) Private Offering.
Assuming (without any independent investigation or verification by or on behalf of the Company) the accuracy of the representations and warranties of Lenders set forth herein, the offer and sale of the November 2004 Notes are exempt from
registration under Section 5 of the Securities Act of 1933, as amended (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 November 2004 Notes to the registration requirements of Section 5 of the Securities Act. 
  
 (h) SEC Documents. The Company has filed all reports or other filings required to be filed by it under Securities Act and the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), including pursuant to Section 13(a) or 15(d) thereof, for the three years preceding the date hereof (the foregoing materials being collectively referred to herein as the “SEC
Documents”), on a timely basis. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the Securities Act and the Exchange Act, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder, and none of the SEC Documents, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Documents comply in all material respects with applicable accounting requirements and the published rules and
regulations of the Securities and Exchange Commission with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved, except as
may be otherwise indicated in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the
periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments. Since the date of the financial statements included in the Company’s last filed Annual Report on Form 10-K, there has been no event,
occurrence or development that has had a Material Adverse Effect which is not specifically disclosed in any of the SEC Documents. 
  
 (i) Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, finder’s fees or
similar payments by the Company or the Lenders relating to the Financing Documents or the transactions contemplated thereby. 
  

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 (j) Compliance with Obligations to the Lenders. The Company is in compliance with all of its
obligations to the Lenders, including without limitation, pursuant to prior agreements. 
  
 Section 2.2 Representations and Warranties of Lenders. Each Lender severally hereby makes the following representations and warranties to the Company as to itself only as of the date hereof: 
  
 (a) Organization; Authority. The Lender is a corporation or
partnership duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite legal power and authority to enter into and to consummate the transactions contemplated hereby, by the
Security Agreement and by the November 2004 Notes and otherwise to carry out its obligations hereunder and thereunder. The purchase by the Lender of its November 2004 Notes and the Commitments, if any, under this Agreement and the making of Loans
from time to time hereunder at such Lender’s discretion, has been duly authorized by all necessary action on the part of the Lender. This Agreement has been duly executed and delivered by the Lender and constitutes its valid and legally binding
obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights generally
and to general principles of equity. 
  
 (b) Investment
Intent. Each Lender is acquiring its Notes for its own account and without a present intention to distribute or resell it in violation of applicable securities laws. No Lender will offer, sell, transfer, assign, pledge or hypothecate any portion
of the November 2004 Notes in the absence of a registration under, or pursuant to an applicable exemption from, federal and applicable state securities laws. 
  
 (c) Experience. The Lender has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in its November 2004 Notes and has so evaluated the merits and risks of such investment. 
  
 (d) Ability of Lender to Bear Risk of Investment; Accredited Investor. The Lender is able to bear the economic risk of an investment in its
November 2004 Notes at the present time, is able to afford a complete loss of such investment. The Lender is an “accredited investor” as such term is defined in Rule 501 under the Securities Act. 
  
 (e) Access to Information. The Lender acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of its November 2004 Notes and the merits and risks of investing in its
November 2004 Notes; (ii) access to information about the Company and the Company’s financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the
opportunity to obtain such additional information which the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. 
  

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 ARTICLE 3 
  

CONDITIONS TO ADVANCES 
  
 Any making of any Advance by each Lender is subject to the satisfaction at or before the date of such Advance of each of the conditions set forth below.
These conditions are for the benefit of each Lender and may be waived by such Lender at any time at its discretion. 
  
 (a) Discretion of Lender. The Lender shall have determined, in its sole and absolute discretion that the making of such Advance is
desirable; 
  
 (b) Absence of Default or Event of
Default. There shall be no Event of Default (as defined in the Notes) or any event which, with the passage of time and/or the giving of notice, would constitute an Event of Default (“Default”); 
  
 (c) Accuracy of the Company’s Representations and
Warranties. The representations and warranties of the Company under this Agreement shall be true and correct in all material respects as of the date of this Agreement, as of the date on which the Borrowing Request with respect to such Borrowing
was delivered by the Company to the Lenders, and as of the date of such Borrowing as though made at that time (except for representations and warranties as of an earlier date, which shall be true and correct in all material respects as of such
date); provided, that any representations and warranties which are limited by their terms to materiality shall have been or shall be (as applicable) true and correct in all respects. 
  
 (d) Performance by the Company. The Company shall have performed all agreements and satisfied all conditions
required to be performed or satisfied by the Company at or prior to the delivery of the Borrowing Request and at or prior to the Borrowing. 
  
 (e) Legality and Possibility. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by the Financing Documents. 
  
 (f) Security. No changes to the type, validity and sufficiency
of the Lender’s collateral security shall have occurred, in the good faith judgment of the Lender, to cause the value of such collateral to be impaired. 
  
 (g) Miscellaneous. The Company shall have delivered to the Lenders such other documents relating to the transactions contemplated by this
Agreement and the other Financing Documents as the Lenders may reasonably request. 
  

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 ARTICLE 4 
  

COVENANTS 
  
 Section 4.1 Affirmative Covenants. The Company covenants that from the date hereof and for so long as any portion of the Loans or other obligation
under the Financing Documents, the Registration Rights Agreement dated October 23, 2002 between the Company and the Lenders (the “Registration Rights Agreement”), the Original Notes, the New Notes, the Guaranties of the Original
Notes, the Guaranties of the New Notes, the July 2004 Notes and the Warrants issued in connection with the Original Loan Agreement (“Warrants” and collectively with the Registration Rights Agreement, the Original Notes, the New
Notes, the July 2004 Notes and the Financing Documents, the “Loan Documents”) shall remain outstanding, it will observe or perform each of the following unless such observance or performance is expressly waived by the Lenders in
writing: 
  
 (a) Corporate Existence. It will maintain its
corporate existence in good standing and remain qualified to do business as a foreign corporation in each jurisdiction in which the nature of its activities or the character of the properties it owns or leases makes such qualification necessary.

  
 (b) Continuation of Business. Except as set forth on
Schedule 4.1(b), it will continue to conduct its business, in all material aspects, as conducted on the day hereof in compliance in all material respects with all applicable rules and regulations of applicable governmental authorities. 

 
 Section 4.2 Dividends; Stock Repurchases. So long as any Notes
remain outstanding, the Company will not declare any dividends on any shares of any class of its capital stock (other than dividends consisting solely of Common Stock or rights to purchase Common Stock of the Company), or apply any of its property
or assets to the purchase, redemption or other retirement of, or set apart any sum for the payment of any dividends on, or for the purchase, redemption or other retirement of, or make any other distribution by reduction of capital or otherwise in
respect of, any shares of any class of its capital stock. 
  
 Section 4.3 Incurrence of Debt; Liens; Transfer of Assets to Subsidiaries. For so long as any Commitments or portion of the Loans (or any other obligation under the Loan Documents) remain outstanding, neither the Company nor any
subsidiary of the Company shall: 
  
 (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 the Notes; (ii) other indebtedness to the Lenders which indebtedness is
expressly subordinated in writing to the indebtedness under the Loan Documents; or (iii) indebtedness to trade creditors in the ordinary course of business consistent with past practice. 
  

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 (b) Directly or indirectly create, incur, assume or permit to exist any lien, pledge, charge or
encumbrance on or with respect to any of its property or assets (including any document or instrument in respect of goods or accounts receivable) whether now owned or held or hereafter acquired, or any income or profits therefrom, except for
Permitted Liens. 
  
 (c) Directly or indirectly transfer any of
its assets to any subsidiary of the Company. 
  
 As used herein,
“Permitted Liens” means (i) liens granted under the Original Security Agreement, the 2003 Security Agreement or the July 2004 Security Agreement; (ii) liens imposed by mandatory provisions of law such as materialmen’s,
mechanic’s or warehousemen’s; (iii) liens for taxes, assessments and governmental charges or levies imposed upon the Company or any subsidiaries or their income, profits or property, if the same are not yet due and payable or if the same
are contested in good faith and as to which adequate reserves have been provided; (iv) pledges or deposits made to secure payment of worker’s compensation insurance, unemployment insurance, pensions or social security programs or to secure the
performance of letters of credits, bids, tenders, public or statutory obligations, surety, performance bonds and other similar obligations; (v) encumbrances consisting of zoning restrictions, easements, or other restrictions on the use of real
property, provided that such do not impair the use of such property for the uses intended and none of which is violated by existing or proposed structures or land use and (vi) the liens and encumbrances disclosed on Schedule A of the Security
Agreement. 
  
 Section 4.5 Warrants issued under Original Loan
Agreement. With respect to the Warrants, the provisions of the Registration Rights Agreement and of Section 4.5 of the Original Loan Agreement shall continue to apply. 
  
 ARTICLE 5 
  
 MISCELLANEOUS 
  
 Section 5.1 Fees and Expenses. The Company shall pay, concurrently with the execution and delivery of this Agreement, the reasonable fees and
expenses of legal counsel for the Lenders incident to the negotiation, preparation, execution, delivery and performance of the Loan Documents incurred to date and, thereafter, upon request of a Lender, the Company, shall pay any additional fees and
expenses incurred by the Lenders and incident to the filing, negotiation, preparation, performance or amendment of the Loan Documents. 
  
 Section 5.2 Entire Agreement. This Agreement, together with the Notes, the Security Agreement, the Guaranties and the other Loan Documents,
contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral or written, with respect to such matters. 
  
 Section 5.3 Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed to have been delivered (i) 
  

 12 

 upon receipt, when delivered personally; (ii) when sent by facsimile, upon receipt if received on a business day prior to
5:00 p.m. (Central Time), or the first business day following such receipt if received on a business day after 5:00 p.m. (Central Time); or (iii) upon receipt, when deposited with a nationally recognized overnight express courier service, fully
prepaid, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be: 
  

			
	 If to the Company:
	  	ISCO International, Inc.
	 	  	1001 Cambridge Drive
	 	  	Elk Grove Village, Illinois 60007
	 	  	Attn: Frank Cesario
	 	  	Fax: (847) 391-5015
		
	 With copies to:
	  	 
		
	 	  	Pepper Hamilton LLP
	 	  	400 Berwyn Park
	 	  	899 Cassatt Road
	 	  	Berwyn, Pennsylvania 19312
	 	  	Attn: Michael P. Gallagher
	 	  	Fax: (610) 640-7835
		
	 If to Manchester Securities Corp.:
	  	712 Fifth Avenue, 36th Floor
	 	  	New York, New York 10019
	 	  	Attn: Mark Brodsky
	 	  	Fax: (212) 974-2092
		
	 With copies to:
	  	 
		
	 	  	Kleinberg, Kaplan, Wolff & Cohen, P.C.
	 	  	551 Fifth Avenue
	 	  	New York, NY 10176
	 	  	Attn: Lawrence D. Hui
	 	  	Fax: (212) 986-8866
		
	 If to Alexander:
	  	Alexander Finance, LP
	 	  	1560 Sherman Avenue, Suite 900
	 	  	Evanston, Illinois 60201
	 	  	Attn: Bradford T. Whitmore
	 	  	Fax: (847) 733-0339
		
	 With copies to:
	  	 
		
	 	  	Sachnoff & Weaver
	 	  	30 S. Wacker Drive
	 	  	Chicago, Illinois 60606
	 	  	Attn: Evelyn C. Arkebauer, Esq.
	 	  	Fax: (312) 207-6400

  
 or such other address or facsimile
number as may be designated in writing hereafter, in the same manner, by such person. 
  

 13 

 Section 5.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in
a written instrument signed, in the case of an amendment, by the Company and by Lenders holding at least 75% of the Commitments; or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver 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. 
  
 Section 5.5 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof. 
  
 Section 5.6 Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Neither the Company nor any Lender may assign this Agreement or any rights or obligations hereunder (other than
an assignment from a Lender to an affiliate of such Lender) without the prior written consent of the other; provided that in the event of an assignment by a Lender requiring the Company’s consent, the Company’s consent shall not be
unreasonably withheld. Any transfer made in violation of this provision shall be null and void. The assignment by a party of this Agreement or any rights hereunder shall not affect the obligations of such party under this Agreement. 
  
 Section 5.7 No Third-Party Beneficiaries. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors and assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person. 
  
 Section 5.8 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the
internal laws of the State of New York without regard to the principles of conflicts of law thereof. 
  
 Section 5.9 Survival. The agreements, representations and warranties and covenants contained in this Agreement shall survive the delivery of the
Notes pursuant to this Agreement and any Advances made thereunder. 
  
 Section 5.10 Counterpart and Facsimile Signatures. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall
create a valid and binding obligation of the executing party with the same force and effect as if such facsimile signature page were an original thereof. 
  

 14 

 Section 5.11 Publicity. 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. 
  
 Section 5.12 Severability. In
case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby
and the parties will attempt to agree upon a valid and enforceable provision which shall be a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 
  
 Section 5.13 Payment of Expenses. The Company agrees to pay all costs
and expenses, including reasonable attorneys’ fees and expenses, which may be incurred by any Lender in successfully enforcing any Loan Document, including without limitation in enforcing Section 5.14 below. 
  
 Section 5.14 Indemnification. The Company hereby agrees to indemnify,
defend and hold harmless each Lender and its respective partners, shareholders, officers, affiliates, employees or agents (“Indemnified Parties”), from and against any and all losses, claims, damages, liabilities and costs,
including reasonable legal fees (collectively “Losses”) (i) incurred as a result of the breach by the Company or any subsidiary of any representation, covenant or other provision in any Loan Document; (ii) incurred as a result of
entering into this Agreement; (iii) incurred in enforcing this Section 5.14 or (iv) incurred involving a third-party claim and arising out of the acquisition, holding and/or enforcement by such Lender of any of the Loan Documents. 
  
 Section 5.15 Like Treatment of Lenders. Neither the Company nor any of
its affiliates shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee, payment for the redemptions or exchange of the Notes, or any Advance thereunder or otherwise, to any holder of Notes, for or as
an inducement to, or in connection with the solicitation of, any consent, waiver or amendment of any terms or provisions of the Loan Documents, unless such consideration is required to be paid to all holders of Notes bound by such consent, waiver or
amendment whether or not such holders so consent, waive or agree to amend and whether or not such holders tender their Notes for redemption or exchange. The Company shall not, directly or indirectly, redeem to prepay any Advances unless such offer
of redemption is made pro rata to all holders on identical terms. 
  
 [Signature Page Follows] 
  

 15 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their
respective authorized persons as of the date first indicated above. 
  

			
	 ISCO INTERNATIONAL, INC.

		
	 By:
	  	 /s/ Amr Abdelmonem

	 Name:
	  	 Amr Abdelmonem, Ph.D.

	 Title:
	  	 Chief Executive Officer

	
	 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., its General
 Partner

  

 16 

 SCHEDULES 
  

			
	 Schedule A
	  	 Schedule of Lenders

		
	 Company Schedules
	  	 

  
 EXHIBITS

  

			
	 Exhibit A
	  	 Secured Grid Note

		
	 Exhibit B
	  	 Third Amended and Restated Security Agreement

		
	 Exhibit C
	  	 Third Amended and Restated Guaranties

		
	 Exhibit D
	  	 Amendments to UCC Financing Statements

		
	 Exhibit E
	  	 Amendments to Patent and Trademark Financing Filings

		
	 Exhibit F
	  	 Legal opinion of counsel to the Company

		
	 Exhibit G
	  	 Form of Notice of Borrowing

 SCHEDULE A 
  

				
	 Lender

	  	Commitment

	 Manchester Securities Corporation
	  	$	4,384,500
	 Alexander Finance, L.P.
	  	$	4,115,500
	 Total
	  	$	8,500,000Third Amended and Restated Security Agreement

 Exhibit 10.2 
  
 THIRD AMENDED AND RESTATED SECURITY AGREEMENT 
  
 Third Amended and Restated Security Agreement, dated as of November 10, 2004 made by and among ISCO International, Inc., a
Delaware Corporation with offices at 451 Kingston Court, Mt. Prospect, Illinois 60056 and formerly known as Illinois Superconductor Corporation (the “Company”), each of the Company’s undersigned subsidiaries (the
“Subsidiaries,” the Company and Subsidiaries are hereafter collectively referred to as the “Debtors” or individually as a “Debtor”), Manchester Securities Corporation, a New York corporation with
offices at 712 Fifth Avenue, 36th Floor, New York, New York 10019 (“Manchester”), Alexander
Finance, LP, an Illinois limited partnership with offices at 1560 Sherman Avenue, Evanston, IL 60201 (“Alexander”; Manchester and Alexander are sometimes individually referred to as a “Secured Party” or together referred
to as “Secured Parties”), and Manchester Securities Corporation as collateral agent (the “Collateral Agent”). 
  
 This Agreement amends and restates the Second Amended and Restated Security Agreement, dated as of July 23, 2004 (the “Existing Security
Agreement”). 
  
 NOW THEREFORE, in consideration
of the foregoing, each Debtor hereby agrees with the Secured Parties and Collateral Agent as follows: 
  
 SECTION 1. Grant of Security Interest. 
  
 (a) As collateral security for all of the Obligations (as defined in Section 2 hereof), the Debtors hereby jointly and severally pledge and collaterally
assign to the Collateral Agent and the Secured Parties, and grant to the Collateral Agent and the Secured Parties a continuing first priority security interest (subject to Permitted Liens (as defined in the Third Amended and Restated Loan Agreement
dated as of the date hereof by and among the Company and the Secured Parties (the “Loan Agreement”)) in the following (the “Collateral”): 
  
 “Collateral” means all assets of the Debtors (whether currently owned or hereafter acquired by a Debtor), including without
limitation all presently existing and hereafter arising (i) accounts, contract rights, and all other forms of obligations owing to the Debtors from any source, including, without limitation, from affiliates and insiders of the Debtors
(“Accounts”); (ii) all of the Debtors’ books and records, including ledgers, records indicating, summarizing, or evidencing the Debtors’ assets or liabilities, or the Collateral, all information relating to the
Debtors’ business operations or financial condition, all computer programs, disc or tape files, printouts, runs or other computer prepared information, and any equipment containing such information (the Debtors’ “Books”);
(iii) all of the Debtors’ present and hereafter acquired equipment, wherever located, and all attachments, accessories, accessions, replacements, substitutions, additions and improvements to any of the foregoing, wherever located
(“Equipment”); (iv) all of the Debtors’ present and hereafter acquired general intangibles and other personal property (including, but not limited to, contract rights, rights arising under common law, statutes or regulations,
choses or things in action, goodwill, patents and patentable inventions, whether described and claimed therein or otherwise, and all reissues, divisions, continuations, continuations-in-part, substitutes, renewals, and extensions thereof, and all
improvements thereon and all other rights of any kind whatsoever accruing thereunder or 

 pertaining thereto, trade names, trademarks, patent and trademark applications, service marks, copyrights, copyright
applications, blueprints, drawings, purchase orders, customer lists, monies due under any royalty or licensing agreements, infringements, claims, computer programs, discs or tapes, deposit accounts, insurance premium rebates, tax refunds, and tax
refund claims, as well as all cash collateral that is hypothecated to secure letters of credit or bonding obligations and the right to sue or otherwise recover for any and all past, present and future infringements and misappropriations thereof, and
all income, royalties, damages and other payments now and hereafter due and/or payable with respect thereto) (“General Intangibles”); (v) all present and future inventory in which a Debtor has any interest, and all of the
Debtors’ present and future raw materials, work in process, finished goods, and packing and shipping material, wherever located, any documents of title representing any of the above (“Inventory”); (vi) all of the Debtors’
negotiable collateral, including all of the Debtors’ present and future letters of credit, notes, drafts, instruments, certificated securities (including but not limited to, the “Pledged Securities” as defined below), documents,
personal property leases (where a Debtor is the lessor), chattel paper and the Debtors’ books and records relating to any of the foregoing (“Negotiable Collateral”); and (vii) any money or other assets of the Debtors which
hereafter come into the possession, custody or control of the Debtors, and the proceeds and products, whether tangible or intangible, of any of the foregoing including proceeds of insurance covering any or all of the Collateral, and any and all
Accounts, Equipment, General Intangibles, Inventory, Negotiable Collateral, money, deposit accounts or other tangible or intangible, real or personal, property resulting from the sale, exchange, collection or other disposition of the Collateral, or
any portion thereof or interest therein, and the proceeds and products thereof; 
  
 in each case howsoever a Debtor’s interest therein may arise or appear (whether by ownership, security interest, claim or otherwise). For purposes of this Security Agreement, the term “Pledged Securities” means (i) all
capital stock and all other securities issued or issuable by all current and future subsidiaries, whether currently issued or issued in the future, including, without limitation, the promissory note issued by Illinois Superconductor Canada
Corporation to the Company (“Subsidiary Securities”); (ii) any capital stock or other securities currently owned or received by the Debtors in the future (“Further Securities”); (iii) all other securities which may
be issued or issuable in exchange for or in respect of the Further Securities and Subsidiary Securities pursuant to the terms hereof; (iv) all dividends, cash, instruments, securities and other property from time to time received, receivable or
otherwise distributed, in respect of, in, for, or upon the exchange or conversion of the securities referred to in clauses (i), (ii) and (iii) above; and (v) all rights and privileges of the Debtors with respect to the Pledged Securities and other
properties referred to in clauses (i), (ii), (iii) and (iv). 
  
 (b) Any pledge, collateral assignment or grant of a security interest to the Collateral Agent and Secured Parties in the Collateral pursuant to the Existing Security Agreement shall continue in full force and effect. 
  
 (c) Upon the future receipt of any certificated securities by any Debtor,
such Debtor shall immediately deliver the certificates representing such securities, together with stock powers duly executed in blank to the Collateral Agent and corporate resolutions of a type reasonably acceptable to the Secured Parties.

  

 2 

 (d) A reasonably detailed list of the Collateral existing as of the date hereof is set forth on Schedule
A attached hereto. For each item of Collateral, Schedule A provides the location, description and ownership and, for items of Collateral which have a certificate of title, the jurisdiction of such certificates, and for those items of Collateral
which are mobile goods (goods that are mobile and generally used in more than one jurisdiction such as motor vehicles, trailers and similar items) the present location of such goods. Schedule A also identifies any liens and encumbrances with respect
to any items of Collateral and sets forth the jurisdiction of incorporation of each Debtor. Schedule A further lists all patents and trademarks and patent and trademark applications owned by the Debtors. 
  
 SECTION 2. Security for Obligations. The security interest
created hereby in the Collateral constitutes continuing collateral security for the (a) prompt payment by the Debtors, as and when due and payable, of all amounts from time to time owing by them to the Secured Parties under the Third Amended and
Restated Loan Agreement, dated as of the date hereof (the “Loan Agreement”); (ii) the Company’s 91⁄2 secured grid notes, due April 1, 2005, as amended, issued on October 23, 2002 (the “2002 Notes”); (iii)
the Company’s 14% secured grid notes due April 1, 2005, as amended, issued on October 24, 2003 (the “2003 Notes”); (iv) the Company’s 14% secured grid notes due April 1, 2005 issued on July 23, 2004 (the
“July 2004 Notes”); (v) the Company’s 14% secured grid notes due April 1, 2005 issued on the date hereof (the “November 2004 Notes”); (vi) the amended and restated guaranties dated as of the date
hereof (the “Restated Guaranties”) (the Loan Agreement, the 2002 Notes, the 2003 Notes, the July 2004 Notes, the November 2004 Notes, the Restated Guaranties and the Existing Security Agreement are hereinafter collectively referred
to as the “Transaction Documents”) with the obligations under this clause (a) being referred to as “Indebtedness” and (b) prompt performance by the Debtors of each of their respective covenants and duties under the
Transaction Documents (the covenants and obligations referred to in clauses (a) and (b) above hereafter collectively referred to as the “Obligations”). The Debtors further jointly and severally agree that the Collateral Agent and
the Secured Parties shall have the rights stated in this Security Agreement with respect to the Collateral in addition to all other rights which the Secured Parties may have by law. 
  
 SECTION 3. Representations and Obligations of the Debtors. Each of the Debtors jointly and severally
represents, warrants and covenants to the Collateral Agent and the Secured Parties as follows: 
  
 (a) Perfection of Security Interest. Each of the Debtors agrees to execute at any time and from time to time such financing statements and to take
whatever other actions are requested by the Collateral Agent to perfect and continue the Collateral Agent and the Secured Parties’ security interest in the Collateral including, without limitation, any filings in the United States Patent and
Trademark Office or foreign recordal offices. Upon request of the Collateral Agent, each Debtor will deliver to the Collateral Agent any and all documents evidencing or constituting the Collateral, possession of which is required in order for the
Collateral Agent and the Secured Parties’ to perfect their security interest therein. Upon request of the Collateral Agent, the Debtors will note Collateral Agent’s and Secured Parties’ interest, as the case may be, upon any and all
Accounts if not delivered to Collateral Agent for possession by the Collateral Agent. The Collateral Agent may at any time and from time to time, and without further authorization from the Debtors, file a carbon, photographic or other reproduction
of any financing statement or of 
  

 3 

 this Security Agreement for use as a financing statement to the extent permitted by applicable law. The Debtors will
reimburse the Collateral Agent for all reasonable expenses for the perfection and the continuation of the perfection of Secured Parties’ security interest in the Collateral. Each Debtor will promptly notify the Collateral Agent of any change in
its name including any change to the assumed business names of such Debtor. This is a continuing Security Agreement and will continue in effect until all Indebtedness is paid in full and any other Obligations are satisfied and the Secured Parties
shall release their interest in the Collateral upon the full and final payment and satisfaction of the Indebtedness and other Obligations. If payment is made by a Debtor, whether voluntarily or otherwise, or by any third party, on the Indebtedness
and thereafter a Secured Party is forced to remit the amount of that payment to such Debtor’s trustee in bankruptcy or to any similar person under any federal, state or foreign bankruptcy law or other law for the relief of debtors, the
Indebtedness shall be considered unpaid for the purpose of enforcement of this Security Agreement. If permitted or required under applicable law, the Collateral Agent may file any financing statements with respect to the Collateral without the
signatures of the Debtors. Any financing statements must state that the Collateral Agent and the Secured Parties have a lien on all of the Debtors’ assets. 
  

(b) Power of Attorney. Each Debtor hereby irrevocably makes, constitutes, and appoints the Collateral Agent (and all of such Collateral
Agent’s officers, employees or agents designated by such Collateral Agent) as its true and lawful attorney, with power to: (i) sign such Debtor’s name on any of the documents described hereunder or on any other similar documents to be
executed, recorded, or filed in order to perfect or continue perfected the Collateral Agent’s and Secured Parties’ security interest in the Collateral; (ii) at any time that an Event of Default has occurred and is continuing, execute, sign
and endorse such Debtor’s name on any invoice or bill of lading relating to any Account, drafts against Account Debtors, schedules and assignments of Accounts, verifications of Accounts, and notices to Account Debtors; (iii) send requests for
verification of Accounts; (iv) at any time that an Event of Default has occurred and is continuing, execute, sign and endorse such Debtor’s name on any checks, notices, instruments, acceptances, money orders, drafts, warrants or other item of
payment or security that may come into the Collateral Agent’s possession; (v) at any time that an Event of Default has occurred and is continuing, demand, collect, receive, receipt for, sue and recover all sums of money or other property which
may now or hereafter become due, owing or payable from the Collateral; (vi) file any claim or claims or, following an Event of Default, take any action or institute or take part in any proceedings, either in its own name or in the name of such
Debtor, or otherwise, which in the discretion of the Collateral Agent may seem to be necessary or advisable; (vii) at any time that an Event of Default has occurred and following acceleration of the Indebtedness, direct the Account Debtors and other
persons sending mail to the Debtors to send all mail relating to the Collateral to the Collateral Agent; (viii) at any time that an Event of Default has occurred and is continuing, make, settle, and adjust all claims under the Debtors’ policies
of insurance and make all determinations and decisions with respect to such policies of insurance; and (ix) at any time that an Event of Default has occurred and is continuing, settle and adjust disputes and claims respecting the Accounts directly
with Account Debtors, for amounts and upon terms which the Collateral Agent determines to be reasonable, and the Collateral Agent may cause to be executed and delivered any documents and releases which the Collateral Agent determines to be
necessary. The appointment of the Collateral Agent as such Debtor’s attorney, and each and every one of the Collateral Agent’s and Secured Parties’ rights and powers, being coupled with an interest, is irrevocable and shall remain in
full force and effect until all of the Indebtedness has been fully repaid and the other Obligations satisfied and the Collateral Agent renounces such appointment. 
  

 4 

 (c) No Violation. The execution and delivery of this Security Agreement does not violate any law
or agreement governing any Debtor or to which any Debtor is a party, and the Debtors’ certificates or articles of incorporation and bylaws or other organizational documents do not prohibit any term or condition of this Security Agreement. The
execution and delivery hereof is in the interest of each of the Debtors. 
  
 (d) Enforceability of Collateral. With respect to the Accounts, and General Intangibles, the Collateral is enforceable in accordance with its terms, is genuine, and complies in all material respects with
applicable laws concerning form, content and manner of preparation and execution, and, to the best of the knowledge of the Debtors, all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact
obligated as they appear to be on the Collateral, except as such enforcement may be limited by bankruptcy, insolvency, moratorium, fraudulent conveyance or other laws applicable to creditors’ rights generally and by generally applicable
equitable principles, whether considered in an action at law or in equity. 
  
 (e) Accounts. All Accounts existing as of the date hereof are good and valid Accounts representing an undisputed, bona fide indebtedness incurred by the Account Debtors, and there exists no set-offs or
counterclaims against any such Accounts and no agreements under which any deductions or discounts may be claimed with any Account Debtor except as disclosed to the Collateral Agent and the Secured Parties in writing. 
  
 (f) Removal of Collateral; Transactions Involving Collateral. To the
extent the Collateral consists of Accounts, General Intangibles, Negotiable Collateral or Debtors’ Books the records and other documents pertaining to the Collateral shall be kept at the principal office of the Debtor that owns such collateral,
or at such other locations as are reasonably acceptable to the Collateral Agent. Except as provided below, the Debtors shall keep the non-mobile tangible Collateral at the location(s) at which they are kept specified on Schedule A and shall maintain
any certificate of title of any tangible Collateral in the same jurisdiction as indicated on Schedule A. Except for transactions in the ordinary course of business in accordance with past practice or for sales or dispositions on arm’s length
terms and for fair equivalent value, the Debtors shall not sell, offer to sell, or otherwise transfer, dispose of or encumber any tangible Collateral. Without the prior written consent of the Secured Parties, Debtors shall not sell, offer to sell,
or otherwise transfer, dispose of or encumber any intangible Collateral other than pursuant to license agreements made in the ordinary course of Debtor’s business and consistent with past business practice. Without the prior written consent of
the Secured Parties, no Collateral that is located in the United States shall be moved outside of the United States. 
  
 (g) Title. As of the date hereof, the Debtors hold good and marketable title to all the Collateral, free and clear of all liens and encumbrances
except for the lien of this Security Agreement and Permitted Liens (as defined in the Loan Agreement). No financing statement or other evidence of a lien or transfer covering any of the Collateral is on file in any public office in any jurisdiction
other than those which reflect the security interest created by this Security Agreement or Permitted Liens. The Debtors shall defend the Collateral Agent’s and Secured Parties’ rights in the Collateral against any and all claims and
demands. 
  

 5 

 (h) Prepayments. None of the Collateral has been prepaid by any Account Debtor for any Accounts.

  
 (i) Collateral Schedules and Locations. On a monthly
basis, the Debtors shall deliver to the Collateral Agent schedules of the Collateral, including such information as the Collateral Agent may require, including without limitation names and addresses of Account Debtors, the location of mobile goods
or changes in any certificates of title and descriptions of any after-acquired general intangibles. The Debtors represent and warrant to the Collateral Agent and the Secured Parties that Schedule A is true, accurate and complete in all material
respects and shall be updated monthly by the Debtors to reflect any changes thereto. 
  
 (j) Application of Payments Received With Respect to Collateral. Unless an Event of Default (as defined in Section 4 below) has occurred and is continuing, any amounts received by or on behalf of any Debtor
with respect to any Account pledged as Collateral hereunder may be used by such Debtor in the ordinary course of its business. Following the occurrence and during the continuance of an Event of Default, any amounts received by or on behalf of any
Debtor with respect to any Account shall be applied in the following order: (i) costs and expenses of the Collateral Agent and the Secured Parties reasonably incurred in connection with collecting the Indebtedness and enforcing this Agreement and
the Transaction Documents; (ii) accrued and unpaid interest due and owing on the Indebtedness as of such date; (iii) unpaid principal due and owing with respect to the Indebtedness as of such date; and (iv) any excess to the Debtors or other party
or parties in accordance with applicable law or court order. 
  
 (k) Possession and Collection of Accounts. Following an Event of Default and during the continuance thereof or following acceleration of any Indebtedness, the records and documents evidencing the Accounts pledged as Collateral
hereunder shall, upon the Collateral Agent’s request, be delivered to the Collateral Agent or its agent and held in accordance with the terms of this Security Agreement. 
  
 (l) Maintenance and Inspection of Collateral. The Debtors shall maintain or cause to be maintained all tangible
Collateral in good condition and repair except for ordinary wear and tear. The Debtors will not commit or permit damage to or destruction of the Collateral or any part of the Collateral. The Collateral Agent and its designated representatives and
agents shall have the right at all reasonable times, upon reasonable advance notice, to examine, inspect, and audit the Collateral wherever located and the books, records or any property which is otherwise used in connection with the Collateral. The
Debtors shall immediately notify the Collateral Agent of all material cases involving the return, rejection, repossession, loss or damage of or to any Collateral; of any request for credit or adjustment or of any other dispute arising with respect
to the Collateral; and generally of all happenings and events materially adversely affecting the Collateral or the value or the amount of the Collateral. 
  
 (m) Taxes, Assessments and Liens. The Debtors will pay when due all taxes, assessments and liens upon the Collateral, its use or operation and upon
the Transaction Documents. A Debtor may withhold any such payment or may elect to contest any lien if such 
  

 6 

 Debtor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as the
Collateral Agent’s and Secured Parties’ interest in the Collateral is not jeopardized in the Collateral Agent’s sole reasonable opinion. If any of the Collateral is subjected to a lien which is not discharged or bonded, or the
enforcement thereof stayed (in either case without granting any security interests in any of the assets of any Debtor) within fifteen (15) days or such longer period as is provided by applicable law, but not to exceed thirty (30) days, the Debtors
shall deposit with the Collateral Agent cash, a sufficient corporate surety bond or other security satisfactory to the Collateral Agent (in its discretion) in an amount adequate to provide for the discharge of the lien plus any interest, reasonable
costs, attorneys’ fees or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest the Debtor or Debtors shall defend itself or themselves, the Secured Parties and the Collateral Agent and shall
satisfy any final adverse judgment before enforcement against the Collateral. The Debtors shall name the Collateral Agent as an additional obligee under any surety bond furnished in such contest proceedings. 
  
 (n) Incorporation by Reference. The Debtors hereby restate and affirm
all representations, warranties and agreements contained in the other Transaction Documents (as of each date and time such representations and warranties are made under each of the other Transaction Documents), the terms and conditions of which are
hereby incorporated herein by reference. 
  
 (o) Compliance
With Governmental Requirements. The Debtors shall comply promptly with all laws, ordinances and regulations of all governmental authorities applicable to the production, disposition, or use of the Collateral. The Debtors may contest in good
faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as the Collateral Agent’s interest in the Collateral, in the Collateral Agent’s sole reasonable opinion, is
not jeopardized. 
  
 (p) Insurance. The Debtors shall
maintain insurance with respect to their assets and businesses that is customary for other similarly situated companies. 
  
 (q) The Debtors’ Right to Possession and to Collect Accounts. Except as otherwise provided herein, until the occurrence of an Event of Default
or acceleration of Indebtedness, the Debtors may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Security Agreement or the other Transaction
Documents, provided that the Debtors’ right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by the Collateral Agent is required by law to perfect the Collateral Agent’s and Secured
Parties’ security interest in such Collateral. At any time an Event of Default exists or following acceleration of Indebtedness, the Collateral Agent may exercise its right to directly collect the Accounts and to notify Account Debtors to make
payments directly to the Collateral Agent for application to the Indebtedness, and the Debtors authorize and direct the Account Debtors, if the Collateral Agent exercises such right, to make payments on the Accounts to the Collateral Agent. If the
Collateral Agent at any time has possession of any Collateral, whether before or after an Event of Default, the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if the Collateral
Agent takes such action for that purpose as the Debtors shall reasonably request or as the Collateral Agent, in the Collateral Agent’s sole reasonable 
  

 7 

 discretion, shall deem appropriate under the circumstances, but failure to honor any request by the Debtors shall not of
itself be deemed to be a failure to exercise reasonable care. The Collateral Agent shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security
interest given to secure the Collateral. The Collateral Agent shall have the right to direct who shall collect and service the Accounts in accordance with reasonable commercial practices. 
  
 (r) Transactions with Others. After the occurrence and during the continuation of any Event of Default, the
Collateral Agent may (i) extend the time for payment or other performance, (ii) grant a renewal or change in terms or conditions, or (iii) compromise, compound or release any obligation with an Account Obligor as the Collateral Agent deems
advisable, without obtaining the prior written consent of the Debtors, and no such act or failure to act shall affect the Collateral Agent’s or Secured Parties’ rights against the Debtors or the Collateral. 
  
 (s) Expenditures by the Collateral Agent. If not discharged or paid
when due, and provided that such items have not been contested as permitted herein, the Collateral Agent may (but shall not be obligated to) discharge or pay any amounts required to be discharged or paid by the Debtors under this Security Agreement,
including without limitation all taxes, liens, security interests, encumbrances, and other claims, at any time levied or placed on the Collateral. The Collateral Agent also may (but shall not be obligated to) pay all reasonable costs for insuring,
maintaining and preserving the Collateral. All such expenditures incurred or paid by the Collateral Agent for such purposes will then bear interest at the then rate charged under the Notes from the date incurred or paid by the Collateral Agent to
the date of repayment by the Debtors. All such expenses shall become a part of the Indebtedness and, at the Collateral Agent’s option, will (i) be payable on demand or (ii) upon notice to Debtors be added to the balance of the Notes becoming a
part of the outstanding principal amount due and payable on the maturity date of the Notes. This Security Agreement also will secure payment of these amounts. Such right under this subsection shall be in addition to all other rights and remedies to
which the Collateral Agent and the Secured Parties may be entitled upon the occurrence of an Event of Default. 
  
 (t) Sale or Factoring of Accounts; Release of Accounts. Except with respect to Permitted Liens (as defined in the Loan Agreement), or as otherwise
expressly permitted herein, the Debtors shall not sell or otherwise transfer or encumber any of the Accounts, or other Collateral without the Collateral Agent’s written consent. It is expressly agreed that the Collateral Agent is under no
obligation to grant such a consent and will do so only in its sole and absolute discretion on terms and conditions they deem acceptable in their sole and absolute discretion. 
  
 (u) In the event that in the future, any Collateral is held by subsidiaries, affiliates or joint ventures of the Debtors who
are not a party to this Agreement, then the Debtors shall cause such entities to grant the Collateral Agent an exclusive first priority lien in such Accounts and Inventory, to cause such entities to enter into security agreements reasonably
satisfactory to the Collateral Agent and the Secured Parties, and to take all actions necessary to perfect such security interests. 
  

 8 

 (v) Debt. The Company has no Debt other than Debt created under the Transaction Documents or as
disclosed on Schedule 3(v) hereto. None of the Subsidiaries have any Debt other than that disclosed on Schedule 3(v) hereto. 
  
 (w) Monthly Compliance Certificate. On the last business day of each calendar month, the Company shall deliver to the Collateral Agent a
certificate executed by the Chief Financial Officer of the Company stating that each of the representations made by the Debtors in this Security Agreement are true as of the date of such certificate and no default or Event of Default has occurred
under this Security Agreement. 
  
 (x) Additional
Guarantors. The Company shall cause each of its subsidiaries formed or acquired on or subsequent to the date hereof to deliver a guarantee to the Secured Parties substantially in the form of the Subsidiary Guarantees being delivered on the date
hereof. 
  
 SECTION 4. Events of Default;
Remedies. 
  
 Events of Default. Each of the
following shall constitute an Event of Default under this Security Agreement: 
  
 (a) Event of Default under the 2002 Notes, 2003 Notes, July 2004 Notes or November 2004 Notes. An Event of Default shall have occurred under the 2002 Notes, 2003 Notes, July 2004 Notes, November 2004 Notes or
the Loan Agreement. 
  
 (b) Other Defaults. Failure of any
Debtor to comply with or to perform when due or required (after the expiration of any applicable stated cure periods) any term, obligation, covenant or condition contained in this Security Agreement. 
  
 (c) False Statements. Any warranty, representation or statement made
or furnished to the Collateral Agent or the Secured Parties by or on behalf of the Debtors under this Security Agreement or any certificate or schedule required thereby is false or misleading in any material respect, either now or at the time made
or furnished. 
  
 (d) Defective Collateralization. This
Security Agreement ceases to be in full force and effect at any time and for any reason (other than by reasons caused solely by actions of the Collateral Agent); or the security interest intended to be created by this Security Agreement is not
created and perfected, or such security interest ceases to be valid and perfected at any time and for any reason. 
  
 (e) Material Adverse Change. The Secured Parties shall have determined in good faith (which determination shall be conclusive) that a material
adverse change has occurred in the condition, value or operation of a material portion of the Collateral. 
  
 SECTION 5. Rights and Remedies on Default. If an Event of Default occurs and is continuing under this Security Agreement, at any time
thereafter, the Collateral Agent and the Secured Parties shall have all the rights of a secured party under the New York Uniform Commercial Code. In addition and without limitation, the Collateral Agent and the Secured Parties may exercise any one
or more of the following rights and remedies: 
  
 (a)
Accelerate Indebtedness. The Collateral Agent may declare the entire Indebtedness immediately due and payable, without notice. 
  

 9 

 (b) Assemble Collateral. The Collateral Agent may require the Debtors to deliver to the Collateral
Agent all or any portion of the Collateral and other documents relating to the Collateral. The Collateral Agent may require the Debtors to assemble the Collateral and make it available to the Collateral Agent at a place to be designated by the
Collateral Agent. The Collateral Agent also shall have full power to enter upon the property of the Debtors to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Security Agreement at the time of
repossession, the Debtors agree that the Collateral Agent may take such other goods, provided that the Collateral Agent makes reasonable efforts to return them to the Debtors after repossession. 
  
 (c) Sell the Collateral. The Collateral Agent shall have full power to
sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in its own name or that of the Debtors. The Collateral Agent may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market, the Collateral Agent will give the Debtors reasonable notice of the time after which any private sale or any other intended disposition of the Collateral is to be made. The
requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of
retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Security Agreement and shall be payable on demand, with interest at the lower of twenty percent (20%) per annum or
the highest rate permitted by law from date of expenditure until repaid. 
  
 (d) Foreclosure. Maintain a judicial suit for foreclosure and sale of the Collateral. 
  
 (e) Appoint Receiver. To the extent permitted by applicable law, the Collateral Agent shall have the following rights and remedies regarding the
appointment of a receiver: (i) the Collateral Agent may have a receiver appointed as a matter of right, (ii) the receiver may be an employee of the Collateral Agent and may serve without bond, and (iii) all fees of the receiver and the
receiver’s attorney shall become part of the Indebtedness secured by this Security Agreement and shall be payable on demand, with interest at the lower of twenty percent (20%) per annum or the highest rate permitted by law from date of
expenditure until repaid. 
  
 (f) Transfer Title. Effect
transfer of title upon sale of all or part of the Collateral. For this purpose, the Debtors irrevocably appoint the Collateral Agent, acting singly, as its attorneys-in-fact to execute endorsements, assignments and instruments in the name of the
Debtors as shall be necessary or reasonable. With respect to any such transfer of trademarks, the applicable Debtor hereby transfers all goodwill associated therewith. 
  
 (g) Collect Revenues, Apply Accounts. The Collateral Agent, either itself or through a receiver, may collect the
payments, rents, income, and revenues from the Collateral. The Collateral Agent may at any time in its discretion transfer any Collateral into its own names or that of its nominees and receive the payments, rents, income, and revenues therefrom and
hold the same as security for the Indebtedness or apply it to payment of the Indebtedness in such order 
  

 10 

 of preference as the Collateral Agent may determine. The Collateral Agent may demand, collect, receipt for, settle,
compromise, adjust, sue for, foreclose, or realize on the Collateral as the Collateral Agent may determine, whether or not the Indebtedness is then due. For these purposes, the Collateral Agent may, on behalf of and in the name of the Debtors, open
and dispose of mail addressed to any Debtor; change any address to which mail and payments are to be sent; and endorse notes, checks, drafts, money orders, documents of title, instruments and items pertaining to payment, shipment or storage of any
Collateral. To facilitate collection, the Collateral Agent may, notify Account Debtors and obligors on any Collateral to make payments directly to the Collateral Agent. 
  
 (h) Obtain Deficiency. If the Collateral Agent chooses to sell any or all of the Collateral and/or pursue any other
remedy available hereunder, under any other agreement, at law or in equity, the Collateral Agent may obtain a judgment against the Debtors for any deficiency remaining on the Indebtedness due to the Secured Parties after application of all amounts
received from the exercise of the rights provided in this Security Agreement. The Debtors shall be liable for a deficiency even if the transaction described in this Subsection is a sale of accounts or chattel paper. 
  
 (i) Application of Proceeds. The proceeds of any foreclosure or
realization upon the Collateral shall be applied: 
  
 (i) First,
to the costs and expenses of collection; 
  
 (ii) Second, to
overdue interest; 
  
 (iii) Third, to the outstanding principal
amount of the Indebtedness; and 
  
 (iv) Fourth, any excess to the
Debtors or other party or parties in accordance with applicable law or court order. 
  
 (j) Other Rights and Remedies. The Collateral Agent and the Secured Parties shall have all the rights and remedies of a secured creditor under the provisions of the New York Uniform Commercial Code, as may be
amended from time to time. In addition, the Collateral Agent and the Secured Parties shall have and may exercise any or all rights and remedies they may have available at law, in equity, or otherwise. 
  
 SECTION 6. Cumulative Remedies. All of the Collateral
Agent’s and the Secured Parties’ rights and remedies, whether evidenced by this Security Agreement, or the other Transaction Documents or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election
by the Collateral Agent or the Secured Parties to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of a Debtor under this Security Agreement, after such
Debtor’s failure to perform, shall not affect the Collateral Agent’s and Secured Parties’ right to declare a default and to exercise their remedies. 
  

 11 

 SECTION 7. Pledged Securities. 
  
 (a) So long as no Event of Default shall have occurred and be continuing:

  
 (i) The Debtors shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged Securities or any part thereof for any purpose not inconsistent with the terms of this Security Agreement or the Transaction Documents; provided, however, that the Debtors shall not
exercise or refrain from exercising any such right if such action would have a material adverse effect on the value of the Pledged Securities or any part thereof; and provided further that the Debtors shall give the Collateral Agent at least five
days’ prior written notice of the manner in which it intends to exercise, or the reasons for refraining from exercising, any such right. 
  
 (ii) The Debtors shall be entitled to receive and retain any and all dividends and interest paid in respect of the Pledged Securities; provided, however,
that any and all 
  
 (A) (I) dividends and other
distributions paid or payable in cash in respect of any Pledged Securities in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus, (II) cash paid, payable or
otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Pledged Securities or (III), cash dividends resulting from transactions outside the ordinary course of business, shall be used to prepay first the
November 2004 Notes, then the July 2004 Notes, then the 2003 Notes, then the 2002 Notes (on a pro rata basis based on the Principal Amount (as defined in the November 2004 Notes, July 2004 Notes, 2003 Notes and 2002 Notes, as applicable) outstanding
on each such Note), or 
  
 (B) dividends and
interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Securities shall be, and shall be forthwith delivered to the
Collateral Agent to hold as, Collateral and shall, if received by the Debtors, be received in trust for the benefit of the Secured Parties, be segregated from the other property or funds of the Debtors and be forthwith delivered to the Collateral
Agent as Collateral in the same form as so received (with any necessary endorsement). 
  
 The Debtors, promptly upon the request of the Collateral Agent, shall execute such documents and do such acts as may be necessary or desirable in the reasonable judgment of the Collateral Agent to give effect to this
Section 7(a)(ii). 
  
 (iii) The Debtors shall deliver to the
Collateral Agent any distribution consisting of Subsidiary Securities or Further Securities immediately upon receipt, together with executed stock powers and corporate resolutions authorizing the transfer of title of such shares after an Event of
Default pursuant to the terms of this Security Agreement. 
  
 (iv)
The Collateral Agent shall execute and deliver (or cause to be executed and delivered) to the Debtors all such proxies and other instruments as Debtors may reasonably request for the purpose of enabling the Debtors to exercise the voting and other
rights that it is entitled to exercise pursuant to clause (i) above and to receive the dividends or interest payments that it is authorized to receive and retain pursuant to clause (ii) above. 
  

 12 

 (b) Upon the occurrence and during the continuance of an Event of Default: 
  
 (i) All rights of Debtors (x) to exercise or refrain from exercising the
voting and other consensual rights that it would otherwise be entitled to exercise pursuant to Section 7(a)(i) shall, upon notice to Debtors by the Secured Parties, cease and (y) to receive the dividends and interest payments that it would otherwise
be authorized to receive and retain pursuant to Section 7(a)(ii) shall automatically cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall thereupon have the sole right to exercise or refrain from exercising
such voting and other consensual rights and to receive and hold as Pledged Securities such dividends, interest payments and other distributions. For the avoidance of doubt, the Collateral Agent is hereby granted an irrevocable proxy coupled with an
interest to exercise all voting power with respect to the Subsidiary Securities and/or the Further Securities, effective upon the occurrence of an Event of Default. 
  
 (ii) All dividends, interest payments and other distributions that are received by the Debtors contrary to the provisions of
clause (i) of this Section 7(b) shall be received in trust for the benefit of the Secured Parties, shall be segregated from other funds of Debtors and shall be forthwith paid over to the Collateral Agent as Collateral in the same form as so received
(with any necessary endorsement). 
  
 SECTION 8. The
Collateral Agent’s Duties. 
  
 (a) Other than as
specified in this Security Agreement and any amendment hereto, the Collateral Agent shall not be required to take or refrain from taking any actions, to exercise or refrain from exercising any rights, or to make or refrain from making any requests
unless it shall first receive proper instructions from Secured Parties holding at least 75% of the outstanding principal amount of the Obligations (or their respective successors or assigns). 
  
 (b) The Collateral Agent shall hold all Collateral received by it, and shall
make disposition thereof, only in accordance with this Security Agreement or any amendment thereto. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent
shall have no duty as to any Collateral, as to ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Securities, whether or not the Collateral Agent or any of the
Secured Parties has or is deemed to have knowledge of such matters, or as to the taking of any necessary steps to preserve rights against any parties or any other rights pertaining to any Collateral. 
  
 (c) The Collateral Agent shall not be under any duty or obligation to
inspect, review or examine any document, instrument, certificate, agreement or other papers to determine that they are enforceable or that they are other than what they purport to be on their face. The Collateral Agent shall hold any Collateral
delivered to the Collateral Agent as the agent of the and for the benefit of each Secured Party, without preference as to any Secured Party. 
  

 13 

 (d) The duties and obligations of the Collateral Agent shall be determined solely by the express
provisions of this Security Agreement or any amendment hereto or any instructions permitted hereby. The Collateral Agent shall have no obligation with respect to any other matters covered in any other document other than as expressly provided
herein, or any amendment hereto. The Collateral Agent shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Security Agreement or as set forth in a written amendment to this Security
Agreement executed by the parties hereto or their successors or assigns. No representations, warranties, covenants or obligations of the Collateral Agent or any Secured Party shall be implied with respect to this Agreement or the Collateral
Agent’s services hereunder. Without limiting the generality of the foregoing, the Collateral Agent: 
  
 (i) shall use the same degree of care and skill as a reasonably prudent person would use in similar circumstances (without limiting the generality of the
foregoing, the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent
accords its own property of like tenor); 
  
 (ii) shall not be
obligated to take any legal action hereunder that might in its reasonable judgment involve any expense or liability unless it has been furnished with reasonable indemnity from the Secured Parties; 
  
 (iii) may rely on and shall be protected in acting in good faith upon any
certificate, instrument, opinion, notice, letter, telegram or other document, or any security, delivered to it and in good faith believed by it to be genuine and to have been signed by the proper party or parties; 
  
 (iv) may rely on and shall be protected in acting in good faith upon the
written instructions of Secured Parties holding at least 75% of the outstanding principal amount of the Obligations; 
  
 (v) may consult its own independent counsel satisfactory to it and the opinion of such counsel shall be full and complete authorization and protection in
respect of any action taken, suffered, or omitted by it hereunder in good faith and in furtherance of its duties hereunder, in accordance with the opinion of such counsel; 
  
 (vi) may execute any of the powers hereunder or perform any duties hereunder either directly or through agents or attorneys;
and 
  
 (vii) will be regarded as making no representation and
having no responsibilities (except as expressly set forth herein) as to the validity, sufficiency, value, genuineness, ownership or transferability of any portion of the Collateral, and will not be required to and will not make any representations
as to the validity, value or genuineness of any portion of the Collateral. 
  
 (e) Neither the Collateral Agent nor any of its partners, agents or employees, shall be liable for any error in judgment, for any mistake of fact or for any action taken or omitted to be taken by it or them hereunder
or in connection herewith in good faith and believed by it or them to be within the purview of this Security Agreement, except for its or their own gross negligence, 
  

 14 

 lack of good faith or willful misconduct. In no event shall the Collateral Agent or its partners, officers, agents and
employees be held liable for any special, indirect or consequential damages resulting from any action taken or omitted to be taken by it or them hereunder in connection herewith even if advised of the possibility of such damages. 
  
 (f) Whenever, in the administration of this Security Agreement, the
Collateral Agent reasonably shall deem it necessary that a matter be proved or established prior to taking, suffering or omitting any action under this Security Agreement, such matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a certificate of the Secured Parties, and such certificate shall be full warranty to the Collateral Agent for any action taken, suffered or omitted under the provisions of this
Agreement, upon the faith thereof. 
  
 SECTION 9.
Miscellaneous Provisions. 
  
 (a) Entire
Agreement; Amendments. This Security Agreement, together with the other Transaction Documents, constitute the entire understanding and agreement of the parties as to the matters set forth in this Security Agreement. No alteration of or amendment
to this Security Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. 
  
 (b) CHOICE OF LAW AND VENUE; MUTUAL JURY TRIAL WAIVER. THE VALIDITY OF THIS SECURITY AGREEMENT, ITS CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. THE PARTIES MUTUALLY IRREVOCABLY AND UNCONDITIONALLY AGREE (I)
THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK, NEW YORK COUNTY AND THAT THE PARTIES SHALL BE SUBJECT TO THE JURISDICTION
OF SUCH COURTS, AND (II) THAT SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, SHALL CONSTITUTE PERSONAL SERVICE. EACH DEBTOR, THE COLLATERAL AGENT AND THE SECURED PARTIES WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY
RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 9(b). EACH DEBTOR, THE COLLATERAL AGENT AND THE SECURED PARTIES HEREBY WAIVES THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS SECURITY AGREEMENT OR ANY OF THE ACTIONS CONTEMPLATED HEREIN, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND
ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH DEBTOR, THE COLLATERAL AGENT AND THE SECURED PARTIES REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. 
  

 15 

 (c) Attorneys’ Fees; Expenses. The Debtors agree to pay, jointly and severally upon demand,
all of the Collateral Agent’s and Secured Parties’ costs and expenses, including without limitation reasonable attorneys’ fees and legal expenses, incurred in connection with the enforcement of this Security Agreement. The Collateral
Agent or any Secured Party may pay someone else to help enforce this Security Agreement, and the Debtors shall pay the costs and expenses of such enforcement. Costs and expenses include without limitation the Collateral Agent’s and Secured
Parties’ reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, reasonable attorneys’ fees and legal expenses for bankruptcy proceedings (and including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection services. The Debtors also shall pay all court costs and such additional fees as may be directed by the court. 
  
 (d) Caption Headings. Caption headings in this Security Agreement are for convenience purposes only and are not to be
used to interpret or define the provisions of this Security Agreement. 
  
 (e) Notices. All notices required to be given under this Security Agreement shall be given in writing and shall be effective when actually delivered or two (2) days after being deposited in the United States mail, first class,
postage prepaid, addressed to the party to whom the notice is to be given or, if via facsimile, when sent via facsimile transmission to the party to whom the notice is to be given and confirmation of such transmission has been received, at the
address and/or facsimile number shown below: 
  
 If to Elliott or
the Collateral Agent: 
  
 Manchester Securities Corporation

 712 Fifth Avenue, 36th Floor 
 New York, New York 10019 
 Telephone: (212) 974-6000 
 Facsimile: (212) 974-2092 
 Attention: Mark Brodsky 
  
 With a copy to: 
  
 Kleinberg, Kaplan, Wolff & Cohen, P.C. 
 551 Fifth Avenue, 18th Floor 
 New York, New York 10176 
 Telephone: (212) 986-6000 
 Facsimile: (212)
986-8866 
 Attention: Lawrence D. Hui, Esq. 
  

 16 

 If to Alexander: 
  
 Alexander Finance, LP 
 1560 Sherman Avenue 
 Evanston, Illinois 
 Telephone: (847) 733-0232 
 Facsimile: (847) 733-0339 
 Attention: Bradford T. Whitmore 
  
 With a copy to: 
  
 Sachnoff & Weaver 
 30 S. Wacker Drive

 Chicago, Illinois 60606 
 Telephone: (312) 207-3879 
 Facsimile: (312) 207-6400 
 Attention: Evelyn C. Arkebauer, Esq. 
  
 If to the Company or a Subsidiary: 
  
 ISCO
International, Inc. 
 1001 Cambridge Drive 
 Elk Grove Village, Illinois 60007 
 Telephone: (847) 391-9400 
 Facsimile: (847) 391-5015 
 Attention:: Frank
Cesario 
  
 With a copy to: 
  
 Pepper Hamilton LLP 
 400 Berwyn Park 
 899 Cassatt Road 

Berwyn, Pennsylvania 19312 
 Telephone:
(610) 640-7800 
 Facsimile: (610) 640-7835 
 Attention: Michael P. Gallagher, Esq. 
  
 Any party may change its address for notices under this Security Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, the
Debtors agrees to keep the Collateral Agent informed at all times of the Debtors’ current addresses. 
  
 (f) Severability. The parties acknowledge and agree that the Collateral Agent and the Secured Parties are not agents or partners of each other,
that all representations, warranties, covenants and agreements of the Collateral Agent and the Secured Parties hereunder are several and not joint, that the Collateral Agent and the Secured Parties shall not have any responsibility or liability for
the representations, warranties, agreements, acts or omissions of the other and that any rights granted to the Collateral Agent and the Secured Parties hereunder shall be enforceable by each of the Collateral Agent and the Secured Parties hereunder.
If a court of competent jurisdiction finds any provision of this Security Agreement to be invalid or unenforceable as to 
  

 17 

 any person or circumstance, such finding shall not render that provision invalid or unenforceable as to any other persons
or circumstances. If feasible, any such offending provision shall be deemed to be modified to be within the limits of enforceability or validity; however, if the offending provision cannot be so modified, it shall be stricken, and all other
provisions of this Security Agreement in all other respects shall remain valid and enforceable and such offending provision shall not be affected in any other jurisdiction. 
  
 (g) Successor Interests. Subject to the limitations set forth above on transfer of the Collateral, this Security
Agreement shall be binding upon and inure to the benefit of the parties, their successors and assigns to the extent permitted by Section 5.6 of the Loan Agreement. The Debtors shall not, however, have the right to assign this Security Agreement
without the prior written consent of the Secured Parties which may be withheld for any reason in the Secured Parties’ sole discretion. 
  
 (h) Waiver. The Collateral Agent and the Secured Parties shall not be deemed to have waived any rights under this Security Agreement unless such
waiver is given in writing and signed by the Collateral Agent and the Secured Parties. No delay or omission on the part of the Collateral Agent or Secured Parties in exercising any right shall operate as a waiver of such right or any other right. A
waiver by the Collateral Agent or Secured Parties of a provision of this Security Agreement shall not prejudice or constitute a waiver of the Collateral Agent’s or the Secured Parties’ right otherwise to demand strict compliance with that
provision or any other provision of this Security Agreement. No prior waiver by the Collateral Agent or Secured Parties, nor any course of dealing between the Secured Parties and the Debtors, shall constitute a waiver of any of the Collateral
Agent’s or the Secured Parties’ rights or of any of the Debtors’ obligations as to any future transactions. Whenever the consent of the Collateral Agent and/or the Secured Parties is required under this Security Agreement, the
granting of such consent in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of the Collateral Agent and/or
the Secured Parties. 
  
 (i) Indemnity. The Debtors agree,
jointly and severally, to indemnify, pay and hold the Collateral Agent, each Secured Party and the officers, partners, directors, employees, agents and affiliates thereof (collectively, the “indemnitees”) harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel)
that may be imposed on, incurred by, or asserted against any indemnitee, in any manner relating to or arising out of this Security Agreement and any action undertaken or contemplated hereby. This indemnification shall survive the satisfaction and
payment of the Indebtedness and termination of this Security Agreement. 
  
 (j) Subsidiary Liability. Notwithstanding anything in this Security Agreement to the contrary, each Subsidiary’s obligations hereunder shall not exceed the maximum amount that would not be subject to avoidance under fraudulent
conveyance, fraudulent transfer, and other similar laws. 
  
 (k)
No Subrogation. Notwithstanding any payment made by any Debtor hereunder or any set-off or application of funds of any Debtor by the Secured Parties, no Debtor shall be 
  

 18 

 entitled to be subrogated to any of the rights of the Secured Parties against a Debtor or any collateral security or
guarantee or right of offset held by the Secured Parties for the payment of the Indebtedness, nor shall any Debtor seek or be entitled to seek any contribution or reimbursement from another Debtor in respect of payments made by such Debtor
hereunder, until all amounts owing to the Secured Parties by the Debtors under any Transaction Documents are paid in full. If any amount shall be paid to any Debtor on account of such subrogation rights at any time when any such amounts shall not
have been paid in full, such amount shall be held by such Debtor in trust for the Secured Parties, segregated from other funds of such Debtor, and shall, forthwith upon receipt by such Debtor, be turned over to the Secured Parties in the exact form
received by such Debtor (duly indorsed by such Debtor to Secured Parties, if required), to be applied against the Indebtedness of the Debtors under the Transaction Documents, whether matured or unmatured, in such order as the Secured Parties may
determine. 
  
 (l) The actions of the holders of 75% of the
outstanding principal amount of the Obligations shall be deemed the actions of Secured Parties for purposes of giving any notice or enforcing any rights or remedies. 
  
 [Signature Page Follows] 
  

 19 

 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:
	 	 /s/ Amr Abdelmonem

	 	 	 Name:
	 	 Amr Abdelmonem, Ph.D.

	 	 	 Title:
	 	 Chief Executive Officer

		
	 	 	 SPECTRAL SOLUTIONS, INC.

			
	 	 	 By:
	 	 /s/ Amr Abdelmonem

	 	 	 Name:
	 	 Amr Abdelmonem, Ph.D.

	 	 	 Title:
	 	 Chief Executive Officer

		
	 	 	 ILLINOIS SUPERCONDUCTOR CANADA CORPORATION

			
	 	 	 By:
	 	 /s/ Amr Abdelmonem

	 	 	 Name:
	 	 Amr Abdelmonem, Ph.D.

	 	 	 Title:
	 	 Chief Executive Officer

		
	 	 	 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., its General Partner

		
	 COLLATERAL AGENT:
	 	 
		
	 	 	 MANCHESTER SECURITIES CORPORATION

			
	 	 	 By:
	 	 /s/ Elliot Greenberg

	 	 	 Name:
	 	 Elliot Greenberg

	 	 	 Title:
	 	 Vice President

  

 20 

 SCHEDULE A 
  

Identification, Ownership and Location of Collateral and Liens 
  

 21

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