exhibit102form86k011309.htm


              

    Exhibit
10.2

     

    FIRST AMENDMENT TO
NOTE

    


    


    This
FIRST AMENDMENT TO NOTE (the “Amendment”) is made
as of January 8, 2009 and effective as of January 2, 2009, by and among ISCO
International, Inc., a Delaware corporation (the “Company”), Alexander
Finance, L.P., an Illinois limited partnership (“Alexander”), and
solely for purposes of Sections 4, 5  and 6 of this Amendment,
Manchester Securities Corporation, a New York corporation
(“Manchester”).

     

    W
I T N E S S E T H:

     

    WHEREAS, on January 3, 2008,
the Company issued to Alexander that certain New Amended and Restated 7% Senior
Secured Convertible Note dated January 3, 2008 (the “Note”); and

    


    WHEREAS, the Company has
requested that Alexander amend the Note to provide for certain changes as more
fully set forth herein.

    


    A
G R E E M E N T:

     

    NOW, THEREFORE, in
consideration of the covenants and agreements herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Alexander agree as follows:

    


    1. Definitions.  All
capitalized terms used herein and not defined or amended herein shall have the
meanings ascribed to them in the Note.

    


    
      	
              2.  

            	
              The
      Note is hereby amended as follows:

            


    

    


    
      	
              a.  

            	
              Replace
      the definition of “Fair Market
      Price” in its entirety with the
  following:

            


    

    


    “ “Fair Market Price”
shall mean the closing price or the closing bid price for the Common Stock on
the Trading Day immediately preceding the date on which the price is being
determined.”

    


    
      	
              b.  

            	
              Delete
      the definition of “Market Price”
      in its entirety.

            


    

    


    
      	
              c.  

            	
              Delete
      the definition of “Principal
      Market” in its entirety.

            


    

    


    
      	
              d.  

            	
              Replace
      the definition of “Trading Day” in
      its entirety with the following:

            


    

    


    “ “Trading Day” shall
mean (x) if the Common Stock is listed on the New York Stock Exchange, NASDAQ or
NYSE Alternext US, a day on which there is trading on such stock exchange, or
(y) if the Common Stock is not listed on either of such stock exchanges but sale
prices of the Common Stock are reported on an automated quotation system, a day
on which trading is reported on the principal automated quotation system on
which sales of the Common Stock are reported, or (z) if the foregoing provisions
are inapplicable, a day on which quotations are reported by National Quotation
Bureau Incorporated.”

    


    
      	
              e.  

            	
              Delete
      the definition of “VWAP” in its
      entirety.

            


    

    


    
      	
              f.  

            	
              Replace
      Section
      3(c)(ii)(D) in its entirety with the
  following:

            


    

    


    “D.  Calculation of Consideration
Received.  In case any option is issued in connection with the
issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
options by the parties thereto, then solely for purposes of this Section 3, the
options will be deemed to have been issued for a consideration of
$0.01.  If any Common Stock or Convertible Securities (other than
shares or options issued or which may be issued pursuant to the Incentive Plan
up to the Incentive Plan Limit) are issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor will be deemed to be the
gross amount received by the Company therefor.  If any Common Stock or
Convertible Securities (other than shares or options issued or which may be
issued pursuant to the Incentive Plan up to the Incentive Plan Limit) are issued
or sold for a consideration other than cash, the amount of the consideration
other than cash received by the Company will be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the arithmetic average of the Fair Market Prices of such securities
during the ten (10) consecutive Trading Days ending on the date of receipt of
such securities.  The fair value of any consideration other than cash
or securities will be determined jointly by the Company, the Holder, and the
holders of the Amended and Restated Notes.  If such parties are unable
to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Business Days after the tenth
(10th) day
following the Valuation Event by an independent, reputable appraiser selected by
the Company and the holders of the Notes.”

    


    
      	
              g.  

            	
              Replace
      Section
      3(d) in its entirety with the
following:

            


    

    


    “(d)  Reservation and Issuance of
Underlying Securities.  The Company covenants that it will at
all times reserve and keep available out of its authorized and unissued Common
Stock solely for the purpose of issuance upon conversion of this Note (including
repayments in stock), free from preemptive rights or any other actual contingent
purchase rights of persons other than the Holder and the holders of the Amended
and Restated Notes, not less than an amount equal to the number of Conversion
Shares.  The Company covenants that all shares of Common Stock that
shall be so issuable shall, upon issue, be duly authorized, validly issued,
fully paid, nonassessable and freely tradeable.”

    


    
      	
              h.  

            	
              Replace
      Section
      3(e) in its entirety with the
following:

            


    

    


    “No
Fractions.  Upon a conversion hereunder the Company shall not
be required to issue stock certificates representing fractions of shares of
Common Stock, but may if otherwise permitted, make a cash payment in respect of
any final fraction of a share based on the Fair Market Price of a share of
Common Stock at such time.  If the Company elects not, or is unable,
to make such cash payment, the Holder shall be entitled to receive, in lieu of
the final fraction of a share, one whole share of Common stock.”

    


    
      	
              i.  

            	
              Replace
      Section
      3(i) in its entirety with the
following:

            


    

    


    “(i)  If
the Conversion Shares are not registered under the Registration Rights Agreement
by September 30, 2009, if the registration statement is not reviewed by the SEC,
or by November 30, 2009 if the registration statement is reviewed by the SEC,
then the then-current interest rate shall increase by a rate of 1% per annum
each month thereafter until such shares are registered, up to the Default Rate;
provided however if the Securities and Exchange Commission (the “Commission”) instructs the
Company that less than all, or none, of the Conversion Shares may be included in
the Registration Statement, there shall be no increase in the interest rate
pursuant to this Section 3(i) unless and until
the Commission instructs the Company that such Conversion Shares may be
permitted to be included in the Registration Statement and the Company has
failed to register such Conversion Shares.”

    


    
      	
              j.  

            	
              Replace
      Section
      4(b) in its entirety with the
following:

            


    

    


    “(b)  Remedies.  If
an Event of Default occurs and is continuing with respect to any of the ISCO
Notes, the Holder may declare all of the then outstanding Principal Amount of
this Note and all other ISCO Notes held by the Holder, including any interest
due thereon, to be due and payable immediately, except that in the case of an
Event of Default arising from events described in clauses (vii) and (viii) of
Section 4(a) hereof, this Note shall become due and payable without further
action or notice.  In the event of an acceleration, the amount due and
owing to the Holder shall be the greater of (1) 110% of the outstanding
Principal Amount of the ISCO Notes held by the Holder (plus all accrued and
unpaid interest, if any) and (2) the product of (A) the highest Fair Market
Price for the five (5) Trading Days immediately preceding the Holder’s
acceleration and (B) the Conversion Ratio.  In either case the Company
shall pay interest on such amount in cash at the Default Rate to the Holder if
such amount is not paid within seven days of Holder’s request.  The
remedies under this Note shall be cumulative.”

    


    3. The
Company and Alexander acknowledge that each of Spectral Solutions, Inc. and
Illinois Superconductor Canada Corporation has been voluntarily dissolved, and
no longer guarantees the Company’s obligations under the Note.

    


    4. The
Company, Alexander and Manchester agree and acknowledge that this Amendment has
been made and entered into in compliance with Section 6(c) of the
Note.

     

    5. The Company’s execution, delivery and performance of
this Amendment does not violate any material term, provision or covenant of any
agreement that is currently in effect
between the Company and either of Alexander or Manchester.

     

    6. The Note,
as amended hereby, shall remain in full force and effect and all terms hereof
are hereby ratified and confirmed by the Company. Except for specifically
provided herein, all other terms and conditions of the Note shall remain in full
force and effect.  Except with respect to the Note, nothing contained in this Amendment shall be deemed to be or construed as a waiver or
modification of any terms or provisions of any agreement between
Alexander and the Company or Manchester and the Company, or any rights of Alexander or Manchester arising
thereunder as a result of the Company’s
execution, delivery and performance of this Amendment.

     

    7. Any and
all references to the Note and any instrument previously and now hereafter
executed by the Company shall be deemed to refer to the Note as amended by this
Amendment and any future amendments hereafter entered into between the Company
and Alexander.

     

    


    


    


    


    


    {Signature
Page Follows}


    
      
        
           

          


        

         


      

      
         


        
          

        

      

      
         


      

    


    IN WITNESS WHEREOF, the
parties hereto have executed this Amendment as of the date and year first
written above.

     

    


    


    


    
      
        	 WITNESS:
      	 	 	 ISCO
      INTERNATIONAL, INC.	 
	
                By:
      /s/Evi Sukandi

              	 	 	
                By:
      /s/ Gary Berger 

              	 
	
                Name:
      Evi Sukandi 

              	 	 	
                Name:
      Gary Berger 

              	 
	
                 

              	 	 	
                Its:
      Chief Financial Officer 

              	 


      

    

    
       


      
        
          	 	ALEXANDER FINANCE, L.P.
      	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Bradford
      Whitmore	 
	 	 	Name:
      Bradford Whitmore	 
	 	 	Title:
      President of Bun Partners, Inc., 	 
	 	 	          General
      Partner of Alexander Finance, L.P. 	 


        



      


      
        
          	 	MANCHESTER SECURITIES
      CORPORATION (in respect of Sections 4, 5 and 6 only)	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Elliot
      Greenberg	 
	 	 	Name:
      Elliot Greenberg 	 
	 	 	Its:
      Vice President 	 
	 	 	 	 


        

      

      


    

     

    
      This
Amendment is agreed to and acknowledged, in its entirety, by:

    

     

     

    
      


      
        
          	 	MANCHESTER SECURITIES
      CORPORATION 	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Elliot
      Greenberg	 
	 	 	Name:
      Elliot Greenberg 	 
	 	 	Its:
      Vice President