EXHIBIT 10.2

 

EXECUTION COPY

 

LOAN AGREEMENT

 

Entered into on this 25th day of June 2003

 

By and Between:

 

Vision-Sciences, Inc., a Delaware (U.S.A.) corporation, having its principal
place of business at 9 Strathmore Road, Natick, Massachusetts 01760, U.S.A., Fax
No. +1-508-650-9976 (the “Company”);

 

And

 

Three BY Ltd., a company duly organized under the laws of Israel and having its
principal place of business at Migdal Tefen, Israel, Fax No. + 972-4-987-2340
(the “Manufacturer”);

 

WHEREAS, the Parties entered into a Contract Manufacturing Agreement dated June
25, 2003 (the “Manufacturing Agreement”), pursuant to which the Manufacturer
undertook to manufacture the Products (as defined in the Manufacturing
Agreement) for and on behalf of the Company, in accordance with and subject to
the terms and conditions of the Manufacturing Agreement; and

 

WHEREAS, in order to facilitate the manufacturing of the Products, as aforesaid,
the Manufacturer is required to purchase certain equipment, detailed in Appendix
“A” of this Agreement (the “Equipment”); and

 

WHEREAS, the Manufacturer has asked the Company to lend it the amount of up to
US $267,5000 (the “Loan Amount”), for the purpose of purchasing the Equipment
(the “Purpose”), and the Company has agreed to extend the Loan Amount to the
Manufacturer, for the Purpose, all subject to and in accordance with the terms
and conditions of this Agreement.

 

1.                                       THE LOAN

 

1.1.                              PRIOR TO ORDERING THE EQUIPMENT FROM THE
RELEVANT SUBCONTRACTOR/S, THE MANUFACTURER SHALL DISCUSS WITH, AND OBTAIN A
WRITTEN APPROVAL, FROM THE COMPANY. UPON RECEIPT OF AN INVOICE RESULTING FROM
SUCH APPROVED PURCHASE ORDER, THE COMPANY SHALL REMIT TO THE MANUFACTURER, THE
PART OF THE LOAN AMOUNT REQUIRED IN ORDER TO COVER 76% OF SAID INVOICE (THE
BALANCE BEING FINANCED BY GOVERNMENT GRANT/S AS SET FORTH IN SECTION 1.10
BELOW), BY TRANSFER OF SAME TO THE BANK ACCOUNT OF THE MANUFACTURER:  IT IS
RECORDED THAT PRIOR TO THE DATE OF SIGNATURE HEREOF, THE COMPANY HAS ALREADY
ADVANCED TO THE MANUFACTURER THE SUM OF US $68,000 ON ACCOUNT OF THE LOAN
AMOUNT.

 

1.2.                              IT IS AGREED AND UNDERSTOOD THAT THE COMPANY
AGREED TO LEND THE LOAN AMOUNT TO THE MANUFACTURER, SOLELY FOR THE PURPOSE. THE
MANUFACTURER SHALL NOT BE ENTITLED TO USE THE LOAN AMOUNT FOR ANY PURPOSE, OTHER
THAN THE PURPOSE.

 

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1.3.                              EXCEPT AS OTHERWISE PROVIDED HEREIN, THE
MANUFACTURER SHALL REPAY THE OUTSTANDING LOAN AMOUNT TOGETHER WITH INTEREST
ACCRUED THEREON (THE “BALANCE”) TO THE COMPANY UPON RECEIPT OF FIRST DEMAND FROM
THE COMPANY. “INTEREST” SHALL MEAN THE INTEREST PAYABLE BY THE MANUFACTURER ON
THE LOAN AMOUNT, AT THE RATE OF LIBOR PLUS 1% PER ANNUM, COMPOUNDED ANNUALLY AND
ACCRUED DAILY AND DENOMINATED IN US DOLLARS.

 

1.4.                              PAYMENT OF THE BALANCE SHALL BE MADE IN US
DOLLARS AND REMITTED TO THE BANK ACCOUNT DESIGNATED BY THE COMPANY FROM TIME TO
TIME. ALL BANKING FEES, INCLUDING REMITTANCE COSTS, PERTAINING TO SAID
REMITTANCE SHALL BE BORNE AND PAID BY THE MANUFACTURER.

 

1.5.                              THE MANUFACTURER SHALL NOT BE ENTITLED TO
PREPAY ANY PORTION OF THE BALANCE, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMPANY.

 

1.6.                              ANY AND ALL PAYMENTS BY THE MANUFACTURER TO
THE COMPANY UNDER THIS AGREEMENT SHALL BE MADE WITHOUT ANY SETOFF OR
COUNTERCLAIM OR DEDUCTION AND SHALL BE FREE AND CLEAR OF AND WITHOUT DEDUCTION
FOR OR WITHHOLDING OF ANY AND ALL TAXES, DUTIES OR LEVIES, EXCEPT TO THE EXTENT
THE MANUFACTURER IS REQUIRED BY LAW TO MAKE SUCH WITHHOLDING FOR TAX PURPOSES
AND TO THE EXTENT SO REQUIRED.

 

1.7.                              THE MANUFACTURER SHALL PAY ANY PRESENT OR
FUTURE STAMP OR SIMILAR TAXES, CHARGES OR LEVIES THAT ARISE FROM ANY PAYMENT
MADE UNDER THIS AGREEMENT OR FROM THE EXECUTION, DELIVERY OR REGISTRATION OF
THIS AGREEMENT OR OTHERWISE WITH RESPECT TO THIS AGREEMENT.

 

1.8.                              IN THE EVENT OF ANY DEFAULT BY THE
MANUFACTURER IN PAYMENT WITHIN THE RELEVANT PERIOD SPECIFIED IN THIS AGREEMENT
OF THE BALANCE, THE MANUFACTURER SHALL PAY TO THE COMPANY, WITHOUT PREJUDICE TO
ANY OTHER RIGHT OR REMEDY AVAILABLE TO THE COMPANY PURSUANT TO THIS AGREEMENT OR
THE APPLICABLE LAW, INTEREST, ON THE OUTSTANDING SUM/S, AT THE HIGHEST RATE
CHARGED BY BANK LEUMI LE’ISRAEL B.M., AT THE RELEVANT TIME OF PAYMENT, FOR
EXCEEDING THE APPROVED OVERDRAFT FACILITIES/LINE OF CREDIT IN ITS BANK ACCOUNTS.

 

1.9.                              NOTWITHSTANDING THE AFORESAID, THE
MANUFACTURER SHALL BE ENTITLED TO REPAY THE BALANCE TO THE COMPANY, WHEN SAME
BECOMES DUE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, INCLUDING IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 3 BELOW, BY WAY OF TRANSFERRING THE
EQUIPMENT TO THE OWNERSHIP OF THE COMPANY, IN A WORKABLE CONDITION AND FREE AND
CLEAR OF ANY LIENS, PLEDGES, ENCUMBRANCES OR ANY OTHER THIRD PARTY RIGHTS. UPON
SUCH TRANSFER, EX WORKS THE PREMISES OF THE MANUFACTURER AT MIGDAL TEFEN, THE
BALANCE SHALL BE DEEMED REPAID IN FULL.

 

1.10.                        IT IS RECORDED THAT THE MANUFACTURER INTENDS TO
SEEK A GRANT FROM THE ISRAELI GOVERNMENT IN THE AMOUNT OF 24% OF THE VALUE OF
THE EQUIPMENT IN ORDER TO ASSIST THE MANUFACTURER IN THE PURCHASE OF THE
EQUIPMENT. GIVEN THE AFORESAID, SHOULD THE MANUFACTURER BE REQUIRED TO REIMBURSE

 

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THE ISRAELI GOVERNMENT WITH ANY PART OF THE SAID GRANT, SOLELY DUE TO THE
TRANSFERRING OF THE EQUIPMENT TO THE OWNERSHIP OF THE COMPANY, AS AFORESAID,
THEN THE COMPANY SHALL BEAR SUCH REIMBURSEMENT, PROVIDED HOWEVER, THAT THE
MANUFACTURER SHALL USE BEST EFFORTS, IN COORDINATION WITH THE COMPANY, IN ORDER
TO AVOID SUCH REIMBURSEMENT.

 

1.11.                        AS A PARTIAL SECURITY FOR THE FULFILLMENT OF THE
MANUFACTURER’S OBLIGATIONS PURSUANT TO THIS AGREEMENT, THE MANUFACTURER SHALL
CREATE IN FAVOR OF THE COMPANY A FIRST PRIORITY SPECIFIC PLEDGE ON THE EQUIPMENT
IN ACCORDANCE WITH THE TERMS OF THE PLEDGE AGREEMENT ATTACHED TO THIS AGREEMENT
AS APPENDIX “B” (THE “PLEDGE AGREEMENT”). IMMEDIATELY FOLLOWING THE PURCHASE OF
THE EQUIPMENT, THE COMPANY AND THE MANUFACTURER SHALL EXECUTE THE PLEDGE
AGREEMENT. FOR THE SAKE OF CLARITY, THE PLEDGE GIVEN TO THE COMPANY, AS SET
FORTH ABOVE, IS IN ADDITION TO AND SHALL NOT DEROGATE FROM ANY OTHER RIGHT OR
REMEDY AVAILABLE TO THE COMPANY UNDER LAW. IF THE MANUFACTURER SHALL BE LEGALLY
PREVENTED FROM GRANTING THE SAID FIRST PRIORITY PLEDGE TO THE COMPANY, THE
PARTIES SHALL AGREE ON A MUTUALLY ACCEPTABLE SOLUTION, INCLUDING THE CREATING IN
FAVOR OF THE COMPANY OF A FIRST PRIORITY SPECIFIC PLEDGE ON AVAILABLE ASSETS OF
THE MANUFACTURER ACCEPTABLE TO THE COMPANY.

 

2.                                       REPRESENTATION OF THE MANUFACTURER

 

The Manufacturer hereby represents and warrants to the Company, as follows:

 

2.1.                              IT HAS THE CORPORATE POWER AND AUTHORITY TO
ENTER INTO THIS AGREEMENT AND TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED
HEREIN;

 

2.2.                              THE EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION AND
THIS AGREEMENT CONSTITUTES A VALID, LEGAL AND BINDING AGREEMENT OF THE
MANUFACTURER, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS;

 

2.3.                              NEITHER THE EXECUTION AND DELIVERY OF THIS
AGREEMENT BY IT NOR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY
WILL (I) VIOLATE, OR RESULT IN A DEFAULT UNDER ANY NOTE, AGREEMENT, CONTRACT,
UNDERSTANDING, ARRANGEMENT, RESTRICTION OR OTHER INSTRUMENT OR OBLIGATION TO
WHICH IT IS A PARTY OR BY WHICH IT MAY BE BOUND; OR (II) VIOLATE ANY ORDER,
AWARD, INJUNCTION, JUDGMENT OR DECREE TO WHICH IT IS SUBJECT.

 

2.4.                              NO CONSENT, APPROVAL, ORDER OR AUTHORIZATION
OF OR REGISTRATION, QUALIFICATION, DESIGNATION, DECLARATION, NOTICE OR FILING
WITH ANY GOVERNMENTAL AUTHORITY OR AGENCY OR ANY OTHER PERSON OR BODY IS
REQUIRED IN CONNECTION WITH THE VALID EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT AND THE EXECUTION, ISSUANCE AND DELIVERY OF THE PLEDGE AGREEMENT.

 

2.5.                              UPON THE SIGNATURE HEREOF, IT SHALL SUBMIT TO
THE COMPANY A LETTER FROM ITS LEGAL ATTORNEY, IN A FORM ACCEPTABLE TO THE
COMPANY, CONFIRMING ITS POWERS AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO
PERFORM ITS OBLIGATIONS HEREUNDER, AND THAT THE EXECUTION, DELIVERY AND
PERFORMANCE

 

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OF THIS AGREEMENT HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION
AND THIS AGREEMENT CONSTITUTES A VALID, LEGAL AND BINDING AGREEMENT OF THE
MANUFACTURER, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS, AND THAT THE
PERSON WHO SIGNED THIS AGREEMENT ON BEHALF OF THE MANUFACTURER IS DULY
AUTHORIZED AND EMPOWERED TO SIGN IT ON THE MANUFACTURER’S BEHALF.

 

3.                                       DEFAULT

 

IN THE EVENT THAT ONE OR MORE OF THE FOLLOWING EVENTS (“EVENTS OF DEFAULT”)
(WHATEVER THE REASON FOR SUCH EVENT OF DEFAULT AND WHETHER IT SHALL BE VOLUNTARY
OR INVOLUNTARY OR BE EFFECTED BY OPERATION OF LAW OR PURSUANT TO ANY JUDGMENT,
DECREE OR ORDER OF ANY COURT OR ANY ORDER, RULE OR REGULATION OF ANY
ADMINISTRATIVE OR GOVERNMENTAL BODY), SHALL HAVE OCCURRED, THEN IN EACH CASE
WHERE AN EVENT OF DEFAULT OCCURS THE BALANCE SHALL BECOME AND BE IMMEDIATELY DUE
AND PAYABLE WITHOUT ANY DECLARATION OR OTHER ACT ON THE PART OF THE COMPANY:

 

3.1.                              DEFAULT IN PAYMENT OF THE BALANCE TO THE
COMPANY WHEN SAME BECOMES DUE IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT;

 

3.2.                              THE INSOLVENCY OF THE MANUFACTURER;

 

3.3.                              THE COMMISSION OF ANY ACT OF BANKRUPTCY BY THE
MANUFACTURER;

 

3.4.                              THE EXECUTION BY THE MANUFACTURER OF A GENERAL
ASSIGNMENT FOR THE BENEFIT OF CREDITORS;

 

3.5.                              THE FILING BY OR AGAINST THE MANUFACTURER OF
ANY PETITION IN BANKRUPTCY OR ANY PETITION FOR RELIEF UNDER THE PROVISIONS OF
THE BANKRUPTCY ORDINANCE [NEW VERSION], 1980, OR ANY OTHER LAW FOR THE RELIEF OF
DEBTORS AND THE CONTINUATION OF SUCH PETITION WITHOUT DISMISSAL FOR A PERIOD OF
THIRTY DAYS OR MORE;

 

3.6.                              THE APPOINTMENT OF A RECEIVER OR LIQUIDATOR
(INCLUDING INTERIM RECEIVER OR LIQUIDATOR, IF SUCH IS NOT DISMISSED WITHIN 45
DAYS) OR TRUSTEE TO TAKE POSSESSION OF ALL OR SUBSTANTIALLY ALL OF THE PROPERTY
OR ASSETS OF THE MANUFACTURER;

 

3.7.                              THE ENTRY OF THE MANUFACTURER INTO LIQUIDATION
PROCEEDINGS, VOLUNTARY OR OTHERWISE; OR

 

3.8.                              THE SALE OF ALL, OR SUBSTANTIALLY ALL, THE
ASSETS OF THE MANUFACTURER, OR MERGER OF THE MANUFACTURER WITH OR INTO ANOTHER
ENTITY, WITHOUT THE PRIOR WRITTEN APPROVAL OF THE COMPANY.

 

4.                                       LAW AND JURISDICTION

 

This Agreement shall be governed by and construed in accordance with the laws of
the State of Israel, without giving effect to the rules of conflict of laws
thereof. The Parties hereby submit to the exclusive jurisdiction of the
competent

 

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courts of the city of Tel-Aviv-Jaffa in all matters pertaining to this
Agreement, to the exclusion of any other jurisdiction.

 

5.                                       MISCELLANEOUS

 

5.1.                              THE COMPANY MAY, WITHOUT OBTAINING THE CONSENT
OF THE MANUFACTURER, ASSIGN OR TRANSFER THIS AGREEMENT OR ANY PART THEREOF, TO
ANY THIRD PARTY. THE MANUFACTURER SHALL NOT BE ENTITLED TO ASSIGN OR TRANSFER
THIS AGREEMENT OR ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER, IN WHOLE OR IN
PART, TO ANY THIRD PARTY, WITHOUT THE PRIOR WRITTEN APPROVAL OF THE COMPANY.

 

5.2.                              FAILURE OF EITHER PARTY TO ENFORCE ANY RIGHT
HEREUNDER SHALL NOT WAIVE ANY RIGHT IN RESPECT OF THE SAME OR OTHER FUTURE
OCCURRENCES.

 

5.3.                              THE HEADINGS OF THIS AGREEMENT ARE FOR EASE OF
REFERENCE ONLY AND SHALL NOT GOVERN OR AFFECT THE CONSTRUCTION HEREOF.

 

5.4.                              THE TERMS AND CONDITIONS HEREIN CONTAINED,
CONSTITUTE THE ENTIRE AND ONLY AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT
TO THE SUBJECT MATTER HEREOF AND SHALL SUPERSEDE ALL PREVIOUS COMMUNICATIONS,
REPRESENTATIONS AND/OR AGREEMENT, EITHER WRITTEN OR ORAL, BETWEEN THE PARTIES IN
RESPECT OF SUCH SUBJECT MATTER.  NO MODIFICATION OF SAID TERMS AND CONDITIONS
SHALL BE BINDING UNLESS AGREED UPON IN WRITING AND SIGNED BY BOTH PARTIES.

 

5.5.                              THE PREAMBLE TO THIS AGREEMENT AND ALL THE
APPENDICES ATTACHED THERETO SHALL BE DEEMED INCORPORATED BY REFERENCE HEREIN AND
SHALL FORM AN INTEGRAL PART HEREOF.

 

5.6.                              ANY NOTICE AND/OR DOCUMENTS REQUIRED OR
PERMITTED TO BE SUBMITTED BY EITHER PARTY TO THE OTHER UNDER THIS AGREEMENT,
SHALL BE IN WRITING TO THE PARTY’S RESPECTIVE ADDRESSES SET FORTH IN THE
PREAMBLE OF THIS AGREEMENT, OR TO ANY OTHER ADDRESS, AS EITHER PARTY MAY
DESIGNATE BY GIVING A WRITTEN NOTICE TO THE OTHER, AND BE DEEMED EFFECTIVELY
DELIVERED:

 

5.6.1.                                       IF DELIVERED PERSONALLY, UPON THE
DATE OF DELIVERY;

 

5.6.2.                                       IF REGISTERED MAILED, WITHIN 4
(FOUR) WORKING DAYS FROM THE DISPATCH THEREOF;

 

5.6.3.                                       IF DELIVERED BY FACSIMILE, WITHIN
24 (TWENTY FOUR) WORKING HOURS FROM THE DISPATCH THEREOF.

 

IN WITNESS WHEREOF, the Parties have signed this Agreement on the date first
hereinabove written.

 

Vision-Sciences, Inc.

Three BY Ltd.

[SEAL]

 

 

By:

/s/Ron Hadani

 

By:

Nahum Silvio, Adv. and /s/Zvi Haim

 

 

 

Title: President and CEO

Titles: Director and General Manager

 

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