ex10-45.htm


    Exhibit
10.45

     

     

    REVOLVING
LOAN AGREEMENT

     

    Between

     

    VISION-SCIENCES,
INC.

    a
Delaware Corporation

    as
Borrower,

     

     

     

    AND

     

     

     

    LEWIS
C. PELL

    as
Lender

     

     

     

     

    DATED:  AS
OF NOVEMBER 9, 2009

     

     

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    TABLE OF
CONTENTS

     

    Page

     

    
      
        	
                1.

              	
                Definitions

              	
                 1

              


      

    

    
      
        	
                2.

              	
                The
      Loan

              	 3


      

    

    
      
        	
                3.

              	
                The
      Note

              	 3


      

    

    
      
        	
                4.

              	
                Interest 

              	 3


      

    

    
      
        	
                5.

              	
                Optional
      Prepayment and Termination 

              	 3


      

    

    
      
        	
                6.

              	
                Mandatory
      Prepayments 

              	 4


      

    

    
      
        	
                7.

              	
                Warrants. 

              	 4


      

    

    
      
        	
                8.

              	
                Fees 

              	 5


      

    

    
      
        	
                9.

              	
                Conditions
      Precedent to Lender’s Obligations

              	 5


      

    

    
      
        	
                10.

              	
                Representations
      and Warranties of Borrower

              	 5


      

    

    
      
        	
                11.

              	
                Survival
      of Representations and Warranties

              	 6


      

    

    
      
        	
                12.

              	
                Affirmative
      Covenants

              	 6


      

    

    
      
        	
                13.

              	
                Negative
      Covenants of Borrower

              	 7


      

    

    
      
        	
                14.

              	
                Events
      of Default

              	 8


      

    

    
      
        	
                15.

              	
                Remedies

              	 8


      

    

    
      
        	
                16.

              	
                Payment
      of Expenses

              	 9


      

    

    
      
        	
                17.

              	
                Notices

              	 9


      

    

    
      
        	
                18.

              	
                No
      Waiver

              	 10


      

    

    
      
        	
                19.

              	
                Failure
      to Exercise Rights

              	 10


      

    

    
      
        	
                20.

              	
                Miscellaneous

              	 10


      

    

    
      
        	
                21.

              	
                Successors
      and Assigns

              	 11


      

    

    
      
        	
                22.

              	
                Waiver
      of Jury Trial

              	 11


      

    

    
      
        	
                23.

              	
                Counterparts

              	
                 12

              


      

    

    


    
      
        
        

      

      
        i

        
          

        

      

      
        
        

      

    

     

    REVOLVING
LOAN AGREEMENT

     

    THIS
REVOLVING LOAN AGREEMENT (“Agreement”),
is dated as of November 9, 2009, between Vision-Sciences,
Inc., a Delaware Corporation (“Borrower”), and Lewis
C. Pell, or his assigns (“Lender”).

     

    W
I T N E S S E T H

     

    WHEREAS,
Borrower has requested that Lender agree to advance funds to Borrower on a
revolving basis in the maximum principal amount of FIVE
MILLION and 00/100 ($5,000,000.00) DOLLARS (the “Loan”), subject to and
upon the terms and conditions hereinafter contained, which Loan shall be
evidenced by a Promissory Note from Borrower to Lender substantially in the form
attached hereto as Exhibit A (as may be amended, restated or modified from time
to time, the “Note”);

     

    WHEREAS,
Lender has agreed to make the Loan available to Borrower on the terms and
conditions hereinafter set forth.

     

    NOW,
THEREFORE, in consideration of the foregoing and of the covenants and
conditions hereinafter set forth, Borrower and Lender hereby agree as
follows:

     

    1. Definitions. As used
herein:

     

    (a) “Additional
Warrant” shall have the meaning ascribed to it in Section 7(b)
hereof.

     

    (b) “Advance”
shall have the meaning set forth in Section 2(a) hereof.

     

    (c) “Advance
Request” shall have the meaning set forth in Section 2(b)
hereof.

     

    (d) “Affiliate”
of any Person (as hereinafter defined) shall mean any other Person which,
directly or indirectly, controls or is controlled by, or is under common control
with such Person.  For the purposes of this definition, “controls”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.

     

    (e) “Availability
Fee” has the meaning ascribed to it in Section 8 hereof.

     

    (f) “Bankruptcy
Event” means the commencement of any bankruptcy case or proceedings by or
against the Borrower, or alleging that the Borrower is insolvent or unable to
pay its debts as they mature or for the readjustment or arrangement of the
Borrower’s debts, whether under the United States Bankruptcy Code or under any
other law, whether state or federal, now or hereafter existing, for the relief
of debtors, or the commencement of any analogous  statutory or
non-statutory proceedings involving the Borrower; provided, however, that if
such commencement of proceedings against the Borrower is involuntary, such
action shall not be considered a Bankruptcy Event if such proceeding shall have
been dismissed within sixty (60) days after the commencement of such
proceedings.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (g)  “Change
of Control” shall mean such time when any Person or related Persons constituting
a group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended), other than the Lender and his Affiliates and
their successors and assigns, become beneficial owners, directly or indirectly,
of more than fifty percent (50%) of the then total voting power of the capital
stock of Borrower.

     

    (h) “Closing
Date” shall mean the date on which this Agreement is executed by the
parties.

     

    (i) “Event of
Default” shall have the meaning set forth in Section 14
hereof.

     

    (j) “Exercise
Price” shall have the meaning ascribed to it in Section 7(a) hereofE“

     

    (k) “Initial
Warrant” shall have the meaning ascribed to it in Section 7 (a)
hereof.

     

    (l) “Interest
Rate” shall mean 7.5% per annum on the principal amount of the Loan
outstanding.

     

    (m) “Loan
Documents” shall mean this Agreement, the Note, the Initial Warrant, each
Additional Warrant and any other documents or agreements given to Lender by
Borrower in connection with the Loan whether or not specifically set forth
herein, as each may be amended, restated or modified from time to
time.

     

    (n) “Maximum
Advance” shall have the meaning ascribed to it in Section 2(a)
hereof.

     

    (o) “Person”
or “Persons” shall mean any one or more individuals, partnerships, corporations
(including a business trust), joint stock companies, limited liability company,
trusts, unincorporated associations, joint ventures or other entities, or a
foreign state or political subdivision thereof or any agency of such state of
subdivision.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

      
        (p) “Termination
Date” shall mean the earlier of November 9, 2012 or the date on which Lender
terminates this Agreement pursuant to Section 14 hereof or Borrower terminates
this Agreement pursuant to Section 5 hereof.

         

        (q) “Warrants
shall have the meaning ascribed to it in Section 7(a).

         

        2. The
Loan.

         

        (a) Provided
that no Event of Default shall have occurred and be continuing hereunder, Lender
agrees, at anytime prior to the Termination Date subject to the terms and
conditions hereinafter set forth, to make advances to the Borrower (each, an
“Advance”) in an aggregate amount at any one time outstanding not to exceed Five
Million and 00/100 ($5,000,000.00) Dollars (the “Maximum
Advance”).  Within the foregoing limits, the Borrower may borrow,
prepay and reborrow Advances at any time prior to the Termination
Date.

         

        (b) Each
request for an Advance (“Advance Request”) shall be made in writing and
delivered to Lender not later than forty-eight (48) hours prior to the expected
payment of an Advance.  Lender shall make the Advance to Borrower in
the amount requested in the Advance Request in immediately available funds for
credit to any account of Borrower as directed by Borrower.

         

        (c) The
proceeds of an Advance shall be used solely by Borrower for working capital
purposes, and otherwise as permitted by this Agreement.

         

        3. The
Note.  The
obligation of the Borrower to repay the principal of, any interest on, all
Advances made by Lender to Borrower shall be as provided for in this Agreement
and the Note.  The entire principal amount of the Loan, plus all
accrued and unpaid interest thereon and all fees and other amounts payable under
this Agreement, shall be due and payable on the Termination Date. 

         

        4. Interest.  Borrower
shall pay interest quarterly, in arrears, on the daily unpaid principal amount
of the Advances at the Interest Rate, payable on the first business day of each
fiscal quarter, commencing on the later of April 1, 2010 or such first business
day of a subsequent fiscal quarter following an Advance.  Interest on
the Note shall be calculated on the basis of a 30-day month and a 360-day
year.

         

        5. Optional
Prepayment and Termination.  At
the Borrower’s option, Advances may be prepaid in whole or in part at any time
by Borrower by paying the principal amount to be prepaid together with interest
accrued and unpaid on the prepaid amount to the date of
prepayment.  This Agreement may be terminated by Borrower at any time,
without penalty or premium, by paying the principal amount of all outstanding
Advances hereunder with all accrued and unpaid interest thereon through the date
of

      

       

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

       

    

    6. Mandatory
Prepayments

     

               
   (a)  Change
of Control.  Upon the occurrence of a Change of Control, the
Borrower will prepay all amounts outstanding under the Loan, without penalty or
premium, together with payment of fees and accrued and unpaid interest through
the date of prepayment in accordance with this Agreement.

     

             
 (b) Strategic
Transactions.  Upon receipt by the Borrower of net proceeds of
$5,000,000 or more from any strategic transaction with, or investment by a third
party in, the Borrower, or from any loan, sale of equity, or otherwise from any
sale or license of material assets of the Company outside of the ordinary course
of business (each, a “Strategic Transaction”), the Borrower shall repay the Loan
in an amount equal to the Applicable Percentage (as defined below) of the then
outstanding principal amount of the Advances, and the Maximum Advance shall at
the same time be reduced by the Applicable Percentage.  The Applicable
Percentage shall mean twenty percent (20%) with respect to a Strategic
Transaction with net proceeds to the Company of $5,000,000, plus an additional
one percent (1%) for each $125,000 of additional net proceeds to the Company
from such Strategic Transaction.  For example, if the Borrower shall
receive aggregate net proceeds of: (a) $7,500,000, the Applicable Percentage
would be 40%, (b) $10,000,000, the Applicable Percentage would be 60%, and (c)
$12,500,000, the Applicable Percentage would be 80%.

     

    7.
Warrants.

     

    (a) Issuance.  On
the date hereof and as consideration for the extension of credit provided
herein, Borrower shall issue Lender (i) a Warrant, in the form attached hereto
as Exhibit B1 (the “Initial Warrant”), to subscribe for and purchase Two-Hundred
Seventy-Two Thousand Seven-Hundred Twenty-Seven (272,727) shares of the
Company’s Common Stock, par value $0.01 per share of Borrower (the “Common
Stock”) at an exercise price of $1.375, and (ii) a Warrant in the form
attached hereto as Exhibit B2 (the “Additional Warrant”), to subscribe for and
purchase, subject to the vesting provisions set forth in Section 7(b),
Three-Hundred Seventy-Eight Thousand Seven Hundred Eighty-Eight (378,788) shares
of Common Stock (the “Additional Warrant Shares”) at an Exercise Price of
$1.65.

     

    (b) Vesting.  The
Initial Warrant shall be fully vested upon issuance.  The number of
Additional Warrant Shares that may be purchased upon exercise of the Additional
Warrant shall vest at the time that each Advance is made pursuant to this
Agreement in an amount equal to (i) the product of the amount of the Additional
Warrant Shares multiplied by (ii) a ratio, (A) the numerator of which shall be
the amount of the new Advance and (B) the denominator of which shall be
5,000,000; provided,
that,
for the purposes of determining the number of vested Additional Warrant Shares
into which the Additional Warrant may be exercised, the amount of the new
Advance shall be considered to equal the amount by which (1) the total amount of
all Advances that have been made (including the new Advance) exceeds (2) the
total amount of all Advances that have been made (including the new Advance)
less the amount of all Advances that have previously been
prepaid.

     

    
      
        
        

      

      
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    (c) Each
Warrant shall be exercisable for the period ending upon fifth anniversary of the
date of issuance of such Warrant, but in all cases until at least one year
following repayment of the Loan and termination of this loan
Agreement.

     

    8. Fees.  Borrower
shall receive an availability fee equal to one-half (.50) percent per annum on
the unused portion of the Loan calculated based on the difference between the
average annual principal amount of the outstanding Advances under the Loan and
the Maximum Advance (the “Availability Fee”).  The Availability Fee
shall be determined annually on the last business day of the 12 month period
ended October 31, 2010 and shall be due and payable November 1, 2010 and on the
first business day of the month following the end of each 12 month period
thereafter.  The accrued unpaid pro rata portion of the Availability
Fee shall also be payable upon the repayment of the Loan and the termination of
this Agreement.

     

    9. Conditions
Precedent to Lender’s Obligations.  Lender
shall not be obligated to make the any Advance hereunder unless the conditions
of this Section 9 shall have been satisfied and Lender shall have received the
following, all in form and substance satisfactory to the Lender in all
respects:

     

    (a) this
Agreement and the Note duly executed by Borrower;

     

    (b) the
Initial Warrant and, the Additional Warrant executed by the
Borrower;

     

    (c) the
representations and warranties of the Borrower made pursuant to Section 10 shall
be true and correct in all material respects as of the date of such Advance;
and

     

    (d) such
other agreements, certificates or other documents as Lender may reasonably
request.

     

    10. Representations
and Warranties of Borrower.  To
induce Lender to make the Loan available hereunder pursuant to this Agreement,
Borrower hereby represents and warrants to Lender as
follows:

     

    (a) Borrower
is a corporation, duly organized and in good standing under the laws of the
State of Delaware and has all requisite power and authority to enter into this
Agreement and the other Loan Documents to be entered into by it and to perform
all of its obligations hereunder and thereunder.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    (b) The
execution and delivery by Borrower of the Loan Documents, and the performance of
its obligations hereunder and thereunder, have been duly authorized by all
necessary action, corporate or otherwise, and do not and will not: (i) require
any further action, consent or approval on the part of the Borrower; (ii)
violate any provision of law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to Borrower; or (iii) result in any breach of or constitute a
default under any indenture or loan or credit agreement or any other agreement,
lease or instrument to which the Borrower is a party or by which the Borrower or
its properties may be bound or affected.

     

    (c) Borrower
is not in default (nor is any waiver in effect) under any applicable law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
any indenture, loan or credit agreement or any other agreement, lease or
instrument applicable to it or by which it is bound, except where such default
would not reasonably be expected to have a material adverse effect on
Borrower.

     

    (d) Upon
execution of the Loan Documents, the Loan Documents will be duly executed and
delivered by Borrower and will be legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms, subject to: (i) applicable bankruptcy, insolvency or similar laws
affecting creditor’s right and remedies generally, (ii) general principles of
equity and (iii) the discretion of the court before which any proceeding
therefore may be brought.

     

    (e) There is
no material action, suit, proceeding, inquiry or investigation, at law or in
equity, or before any court, governmental instrumentality, public board or
arbitrator pending or threatened against or affecting Borrower or any of its
properties or rights, wherein an unfavorable decision, ruling or finding would
adversely effect the validity or enforceability of the Loan
Documents.

     

    11. Survival
of Representations and Warranties.  The
representations and warranties contained in this Loan Agreement and the other
Loan Documents shall survive the execution of this Loan Agreement and the making
of each Advance.

     

    12. Affirmative
Covenants.  To
induce Lender to make each Advance pursuant to this Agreement, Borrower hereby
covenants and agrees that so long as the Loan or any amounts hereunder shall
remain outstanding hereunder, Borrower shall comply with the following
covenants:

     

    (a) Borrower
shall comply in all material respects with all applicable federal, state, county
and municipal laws, rules, regulations and orders of any governmental authority
having jurisdiction over Borrower, except to the extent the failure to so comply
would not reasonably be expected to have a material adverse effect on
Borrower.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

       

    

    (b) Borrower
shall promptly notify Lender of the occurrence of any Event of Default or an
event which, with the giving of notice or passage of time or both, would
constitute an Event of Default and of the occurrence of any event or the
commencement of any action, suit or proceeding which, if adversely determined,
would materially and adversely affect the condition, financial or otherwise, of
Borrower.

     

    13. Negative
Covenants of Borrower.  To
induce Lender to make each Advance pursuant to this Agreement, Borrower hereby
covenants and agrees that so long as the principal amount of any Advances remain
outstanding and so long as this Agreement has not been terminated, Borrower
shall not without the consent of Lender, which shall not be unreasonably
withheld:

     

    (a) At any
time create, incur, assume or suffer to exist any mortgage, deed of trust,
pledge, security interest, encumbrance, lien or charge of any nature upon or
with respect to Borrower’s assets and properties, other than those in effect on
the date hereof and such arising in the ordinary course of business of
Borrower.

     

    (b) Create,
incur, suffer to exist, assume, guaranty, endorse, become a surety, or otherwise
become liable for the debt or other obligations of any other Person whether
directly or indirectly, or make or incur any advance, commitment, other
obligation or loan for the direct or indirect purpose of paying or discharging
any such obligations.

     

    (c) Enter
into any merger or consolidation or liquidate or wind-up or dissolve itself (or
suffer any liquidation or dissolution) or convey, sell, lease, assign, transfer
or otherwise dispose (directly or indirectly) of all or substantially all of its
property, business or assets.

     

    (d) Change,
amend, alter or modify the Certificate of Incorporation or bylaws of
Borrower.

     

    (e) Declare
or pay any dividends on, distributions on or make any payment on account of, or
set apart assets or a sinking fund for the purchase, redemption, defeasance,
retirement or other acquisition of, any interest, shares or any class of stock
or any warrant or option to purchase any such stock whether now or hereafter
outstanding or make any other distribution in respect thereof, directly or
indirectly, whether in cash or property or obligations.

     

    (f) Enter
into any agreement containing any provision which would be violated by the
performance of Borrower’s obligations of the terms of the Loan
Documents.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

       

    

    14. Events
of Default.  The
occurrence of any of the following shall constitute an “Event of Default”
hereunder:

     

    (a) failure
of Borrower to make any payment when due under the Note or this Agreement for a
period of ten (10) days or more;

     

    (b) any
representation or warranty of Borrower made herein shall have been incorrect in
any material respect as of the time when the same shall have been made or is nor
accurate when an Advance is to be made and shall result in a material adverse
effect or impair Borrower’s ability to perform its obligations under the Loan
Documents, and which continues without cure for a period of thirty (30)
days;

     

    (c) Borrower
shall fail to observe any other term, covenant or agreement contained in the
Loan Documents which continues without cure for a period of thirty (30)
days;

     

    (d) any Loan
Documents for any reason shall cease to be in full force and effect or Borrower
shall contest the validity or enforceability of any of the Loan
Documents;

     

    (e) one or
more judgments or decrees shall be entered against Borrower (not paid or fully
covered by insurance) in excess of $250,000 and such judgments or decrees shall
not have been vacated or discharged, stayed or bonded pending appeal within
sixty (60) days from the entry thereof; and

     

    (f) if there
shall be a Bankruptcy Event with respect to Borrower.

     

    15. Remedies.  (a)
Upon the occurrence of an Event of Default and at any time thereafter during the
continuance of such Event of Default, in addition to any remedies available to
Lender under applicable law, Lender may take one or more of the following
remedial steps in any order of priority:

     

    (i) Declare
immediately due and payable the outstanding principal balance of the Note,
together with all and other sums or expenses payable thereunder and hereunder
and accordingly accelerate payment thereof without presentment, demand, notice
of intention to accelerate, notice of acceleration or notice of any other kind,
all of which are expressly waived;

     

    (ii)
Take any
action at law or in equity against Borrower (a) to collect the payments then due
and thereafter to become due under the Loan Documents, or (b) to enforce
performance and observance of any obligation, agreement or covenant of Borrower
or such other parties under this Agreement and the Note;

     

    (iii) Exercise
any and all rights and remedies provided for in this Agreement or the Note or
otherwise available to Lender; and

     

    (iv) Any
unvested portion of the Additional Warrant Shares subject to the Additional
Warrant shall automatically vest.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

       

    

    (b) No remedy
conferred in this Agreement or the other Loan Documents is intended to be
exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or equity or by statute or
otherwise.

     

    16. Payment
of Expenses.

     

    (a) The
Borrower shall pay the reasonable attorneys fees incurred by the Lender in
connection with the negotiation and execution of the Loan Documents. Upon the
occurrence of an Event of Default, Borrower agrees that it shall pay, within
five (5) days after demand, all reasonable out-of-pocket expenses incurred by
Lender in connection with enforcing this Agreement, including, without
limitation,  reasonable attorneys’ fees incurred by Lender in
connection with enforcing the Loan Documents.

     

    (b) If
Borrower should fail to perform or observe, or to cause to be performed or
observed, any covenant or obligation under this Agreement or any of the other
Loan Documents, then the Lender, may (but shall be under no obligation to) take
such steps as are necessary to remedy any such nonperformance or nonobservance
and provide for payment thereof, if any.

     

    All amounts expended or
advanced by the Lender pursuant to this Section 16 shall become part of the
outstanding principal balance of the Loan and the Note shall become due and
payable by the Borrower upon demand by Lender.

     

    17. Notices.  All
notices, consents, approvals and requests required or permitted hereunder or
under any other Loan Document shall be given in writing and shall be effective
for all purposes if hand delivered or sent by (a) certified or registered United
States mail, postage prepaid, return receipt requested; (b) expedited prepaid
delivery service, either commercial or United States Postal Service, with proof
of attempted delivery, or (c) by telecopier (confirmation), addressed as follows
(or at such other address and a person as shall be designated from time to time
by any party hereto, in a written notice to the other parties hereto in the
manner provided for in this Section):

     

    
      
        	      
                                If to
      Lender:

              	Lewis C. Pell
	 	40 Ramland Road
      South, Suite 200
	 	Orangeburg,
      NY 10962
	 	Facsimile 845-365-0620
	 	 
	                With a
      copy to:	Proskauer Rose LLP
	 	1585 Broadway
	 	New York, New York 10036-8299 
	 	Attention: Paul I. Rachlin, Esq.
	 	Facsimile: (212) 969- 3640


         

      

    

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

      
        
          	                If to
      Borrower:  	Vision-Sciences, Inc.
	 	
                  40 Ramland Road
      South

                
	
                   
      

                	
                  Orangeburg, New York
      10962

                
	 	
                  Attention: Katherine
      L. Wolf

                
	 	Fascimile:
      (845) 365-0620
	 	 
	                With a
      copy to:	Cole,
      Schotz, Meisel, Forman & Leonard P.A.
	 	25
      Main Street
	 	      
                  Hackensack,
      New Jersey 07602-0800

                
	 	      
                  Attention:  Marc
      P. Press, Esq.

                
	 	Facsimile
      No.:  (201) 625-6271


        

      

      
        
          
          

        

        
          
          

        

         

      

    

    A notice
shall be deemed to have been given: in the case of hand and telecopier delivery,
at the time of delivery; in the case of registered or certified mail, when
delivered or the first attempted delivery on a business day; or in the case of
expedited prepaid delivery and telecopy, upon the first attempted delivery on a
business day.

     

    18. No
Waiver.  No
course of dealing between Borrower and Lender or any failure or delay on the
part of Lender in exercising any rights or remedies hereunder shall operate as a
waiver of any rights or remedies of Lender and no single or partial exercise of
any rights or remedies hereunder shall operate as a waiver or preclude the
exercise of any other rights or remedies hereunder.  In the event any
agreement contained in this Agreement or the other Loan Documents should be
breached and thereafter waived by Lender, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder or thereunder.

     

    19. Failure
to Exercise Rights.  Nothing
herein contained shall impose upon Lender any obligation to enforce any terms,
covenants or conditions contained in this Agreement and the other Loan
Documents.

     

    20. Miscellaneous.

     

    (a) THIS
AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CHOICE OF LAW CONSIDERATIONS, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN
SUCH STATE AND ANY APPLICABLE LAW OF THE UNITED STATES OF AMERICA, IT BEING
UNDERSTOOD THAT, TO THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH
JURISDICTION, THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE VALIDITY AND
ENFORCEABILITY OF ALL LOAN DOCUMENTS, AND THE DEBT OR OBLIGATIONS ARISING
HEREUNDER.

     

    
      
        
        

      

      
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    (b) ANY
LEGAL SUIT, ACTION OR PROCEEDING AGAINST BORROWER OR LENDER ARISING OUT OF OR
RELATING TO THIS AGREEMENT, THE NOTE OR THE OTHER LOAN DOCUMENTS SHALL BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN NEW YORK, AND BORROWER WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH
SUIT, ACTION OR PROCEEDING, AND HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT IN ANY SUIT, ACTION OR PROCEEDING.

     

    (c) The
parties hereto agree that, notwithstanding anything contained herein to the
contrary, there shall be required the consent of the Borrower and Lender to
amend or modify the terms of the Note and this Agreement.

     

    (d) Borrower
shall execute and deliver, or cause to be executed and delivered to Lender, all
other instruments, certificates and agreements as Lender or Lender’s counsel may
reasonably require, including, but not limited to, estoppel certificates stating
that the Loan is in full force and effect and that there are no defenses or
offsets thereto, to effect, confirm or assure the rights and remedies intended
to be granted or conveyed to Lender under this Agreement or any other Loan
Document.

     

    (e) A
determination that any portion of this Agreement or any of the Loan Documents is
unenforceable or invalid shall not affect the enforceability or validity of any
other provision, which shall be enforced to the maximum extent permitted by
law.

     

    (f) This
Agreement supersedes in all respects all prior agreements and understandings
relating to the Loan.

     

    21. Successors
and Assigns.
Borrower may not assign its rights under this Agreement without the prior
written consent of Lender.  Any such attempted assignment in violation
of this Agreement shall be void and of no effect.  All covenants and
agreements in this Agreement shall bind and inure to the benefit of the
respective permitted successors and assigns of the parties hereto.

     

    22. Waiver
of Jury Trial.  BORROWER
AND LENDER AGREE THAT ANY SUIT, ACTION OR PROCEEDING, WHETHER CLAIM OR
COUNTERCLAIM, BROUGHT BY BORROWER OR LENDER ON OR WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR
THERETO, SHALL BE TRIED ONLY BY A COURT AND NOT BY A JURY.  BORROWER
AND LENDER EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT
TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING.  

     

    
      
        
        

      

      
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    23. Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
effective only upon delivery and thereafter shall be deemed an original, and all
of which shall be taken to be one and the same instrument, for the same effect
as if all parties hereto had signed the same signature
page.

     

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    IN
WITNESS WHEREOF, the undersigned have executed this Loan Agreement as of
the day and year first set forth above.

     

    
      
        
          
            
              
                
                  	WITNESS:	 	 	LENDER:	 
	 	 	 	 	 
	 	 	 	LEWIS C. PELL	 
	
                           

                        	 	 	
                           

                        	 
	
                           

                        	 	 	
                           

                        	 
	
                          Print
      Name:

                        	 	 	
                           

                        	 


                

              

            

          

        

      

    

    
       

       

      
        
          
            	WITNESS:	 	 	BORROWER:	 
	 	 	 	VISION-SCIENCES,
      INC.	 
	 	 	 	 	 
	
                     

                  	 	 	
                     

                  	 
	
                     

                  	 	 	
                    By:   

                  	 
	
                    Print
      Name:

                  	 	 	
                    Name:

                  	 
	 	 	 	Title:	 


          

        

      

       

    

     

    
      
        
        

      

      
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      PROMISSORY
NOTE

       

      
        	
                $5,000,000.00 

              	
                November
      9, 2009

              


      

       

      FOR VALUE
RECEIVED, the undersigned, VISION-SCIENCES,
INC., a Delaware Corporation, having an address at 40 Ramland Road South,
Orangeburg, New York 10962 (the “Borrower”),
promises to pay to the order of LEWIS
C. PELL, having an address at 40 Ramland Road South, Suite 200,
Orangeburg, New York, 10962 (“Lender”),
the lesser of (i) the amount of all Advances made by Lender under the terms of
that certain Loan Agreement dated the date hereof (as amended, restated or
otherwise modified, the “Loan
Agreement”) by and between Borrower and Lender and (ii) FIVE
MILLION and
00/100 ($5,000,000.00) DOLLARS, on the earlier of the occurrence of an
Event of Default or the Termination Date; plus interest thereon payable in
accordance with the terms of the Loan Agreement.  Capitalized terms
used herein and not otherwise defined, shall have the meanings assigned thereto
in the Loan Agreement.  This Note is entitled to the benefits of, and
evidences the obligations incurred under the Loan Agreement to which reference
is made for the terms and conditions of the Loan and the security for the
Loan.

       

      Borrower
hereby waives all demands for payment, presentations for payment, notices of
intention to accelerate maturity, notices of acceleration of maturity, demand
for payment, protest, notice of protest and notice of dishonor, to the extent
permitted by law.  Borrower further waives trial by
jury.  No extension of time for payment of this Note or any
installment hereof, no alteration, amendment or waiver of any provision of this
Note and no release or substitution of any collateral securing Borrower’s
obligations hereunder shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower under this
Note.

       

      By its
acceptance of Lender’s funds and execution of this Note, Borrower acknowledges,
agrees and confirms that it has no defense, offset or counterclaim for any
occurrence in relation to this Loan and Borrower acknowledges that Lender has
complied with all of its obligations under the Loan Documents as of the date
hereof.

       

      This Note
shall be binding on the parties hereto and their respective heirs, legal
representatives, executors, successors and assigns.

       

      Subject
to the Loan Agreement, this Note shall be construed without any regard to any
presumption or rule requiring construction against the party causing such
instrument or any portion thereof to be drafted.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

      This Note
shall be governed by the laws of the State of New York without regard to
conflicts or choice of law considerations.  Borrower hereby
irrevocably consents to the jurisdiction of the courts of the State of New York
and of any federal court located in such State in connection with any action or
proceeding arising out of or relating to this Note or the other Loan
Documents.  This Note may not be changed or terminated
orally.

       

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      IN
WITNESS WHEREOF, the undersigned has executed this Note on the date set forth
above.

       

      
        
        

      

      
        
          
            
              
                	WITNESS:	 	 	BORROWER:	 
	 	 	 	 	 
	 	 	 	VISION-SCIENCES,
      INC.	 
	
                        
                          Name:

                        

                      	 	 	
                        
                          a
      Delaware Corporation

                        

                      	 
	 	 	 	 	 
	
                         

                      	 	 	
                        By:   

                      	 
	
                         

                      	 	 	
                        Name:

                      	 
	 	 	 	Title: