Document:

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.

 

 

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

 

2

 

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

 

3

 

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

 

4

 

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

  
							

 

5Exhibit
10.3

 

Appendix
B

 

Pledge Agreement

 

Entered
into on this      day of    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 Loan Agreement dated
June 25, 2003 (the “Loan Agreement”), pursuant to which the
Manufacturer undertook to create in favor of the Company a first priority
specific pledge on the equipment set forth in Appendix “A” attached
hereto (the “Equipment”);

 

1.                                       The
Pledge

 

1.1.                              The
Manufacturer hereby creates in favor of the Company a first priority specific
pledge on the Equipment.

 

1.2.                              The
Manufacturer hereby undertakes not to transfer, assign or make any other
disposition with or in relation to the Equipment or to further encumber or
pledge the Equipment (whether by way of a lower priority pledge or by way of
giving a floating charge on the assets of the Manufacturer that does not
specifically exclude the Equipment), except with the prior written approval of
the Company.

 

1.3.                              The
Manufacturer will take such action and execute such additional documents as may
be required by the Company in connection with this Agreement or in order to
enable it to enforce its rights hereunder.

 

1.4.                              Upon
the occurrence of any Event of Default under the Loan Agreement, the Company
may, subject to any applicable law, take such action as it deems appropriate
with respect to the Equipment, the enforcement of the pledge granted to it
hereunder and the transfer of the Equipment to its name or the name of its
designee.

 

2.                                       Representation
of the Manufacturer

 

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

 

2.1.                              That
it is the sole owner of the Equipment;

 

 

2.2.                              That
the Equipment is not subject to any encumbrance, claim or right in favor of any
party other than the Company;

 

2.3.                              That
the pledge of the Equipment to the Company pursuant to this Agreement creates a
valid and perfected first priority specific pledge in favor of the Company in
the Equipment;

 

2.4.                              It
has the corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated herein;

 

2.5.                              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;

 

2.6.                              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;

 

2.7.                              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;

 

2.8.                              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 of this Agreement have been duly
authorized by all necessary corporate action and each of 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.                                       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 courts of the city of
Tel-Aviv-Jaffa in all matters pertaining to this Agreement, to the exclusion of
any other jurisdiction.

 

2

 

4.                                       Miscellaneous

 

4.1.                              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 consent of the Company.

 

4.2.                              Failure
of either Party to enforce any right hereunder shall not waive any right in
respect of the same or other future occurrences.

 

4.3.                              The
headings of this Agreement are for ease of reference only and shall not govern
or affect the construction hereof.

 

4.4.                              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.

 

4.5.                              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.

 

4.6.                              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:

 

4.6.1.                                       If
delivered personally, upon the date of delivery;

 

4.6.2.                                       If
registered mailed, within 4 (four) working days from the dispatch thereof;

 

4.6.3.                                       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
  Limited

  	
  [SEAL]

  
	
   

  	
   

  
	
  By:

  	
  /s/ Ron Hadani

  	
   

  	
  By:

  
	
   

  	
   

  
	
  Title:

  	
  Title:

  
					

 

3

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