PROMISSORY NOTE
October 17, 2000
$75,000 Natick, Massachusetts
FOR VALUE RECEIVED, Vision-Sciences, Inc. (the "Maker"), promises to pay to
Lewis C. Pell, or order, at the offices of the Maker or at such other place as
the holder of this Note may designate, the principal sum of $75,000, together
with interest on the unpaid principal balance of this Note from time to time
outstanding at the rate of 9.5% per year until paid in full. Principal payments
of $6,250 and interest accrued on the outstanding principal shall be paid on
March 31, June 30, September 30 and December 31 of each year, beginning December
31, 2000, until September 30, 2003. Without limiting the foregoing, any amounts
due hereunder shall be paid on or before September 30, 2003.
Interest on this Note shall be computed on the basis of a year of 365 days
for the actual number of days elapsed. All payments by the Maker under this Note
shall be in immediately available funds, provided that, if the Maker determines,
in its sole discretion, that it does not have sufficient cash to make any
required payment under this Note, it may, at its election, make a payment or
payments by the delivery of that number of shares of common stock, $0.01 par
value per share, of the Maker (the "Common Stock") that is equal to the amount
of such payment that is due and unpaid divided by the Fair Market Value (as
defined below) of the Common Stock on the day prior to the date the payment is
due. "Fair Market Value" shall mean the closing sale price of the Common Stock
on the Nasdaq SmallCap Market, or such other national stock exchange or
quotation system upon which the Common Stock is then traded. No fractional
shares shall be issued by the Maker pursuant to this paragraph, and the Maker
shall pay the holder cash in lieu of any fractional shares issuable hereunder.
If any payment under this Note is made by issuance of Common Stock pursuant to
this paragraph, the holder agrees that at the request of the Maker, the holder
shall execute a purchaser representation letter in form and substance as the
Maker reasonably requests.
This Note shall become immediately due and payable without notice or demand
upon the occurrence at any time of any of the following events of default
(individually, "an Event of Default" and collectively, "Events of Default"):
(1) default in the payment or performance of this or any other liability
or obligation of the Maker to the holder, including the payment when
due of any principal, premium or interest under this Note, or the
payment of Common Stock in relation thereto as provided above;
(2) the institution against the Maker or any indorser or guarantor of this
Note of any proceedings under the United States Bankruptcy Code or any
other federal or state bankruptcy, reorganization, receivership,
insolvency or other similar law affecting the rights of creditors
generally, which proceeding is not dismissed within thirty (30) days
of filing; or
(3) the institution by the Maker or any indorser or guarantor of this Note
of any proceedings under the United States Bankruptcy Code or any
other federal or state bankruptcy, reorganization, receivership,
insolvency or other similar law affecting the rights of creditors
generally or the making by the Maker or any indorser or guarantor of
this Note of a composition or an assignment or trust mortgage for the
benefit of creditors.
Upon the occurrence of an Event of Default, the holder shall have then, or
at any time thereafter, all of the rights and remedies afforded by the Uniform
Commercial Code as from time to time in effect in the Commonwealth of
Massachusetts or afforded by other applicable law.
Every amount overdue under this Note shall bear interest from and after the
date on which such amount first became overdue at an annual rate which is two
(2) percentage points above the rate per year specified in the first paragraph
of this Note. Such interest on overdue amounts under this Note shall be payable
on demand and shall accrue and be compounded monthly until the obligation of the
Maker with respect to the payment of such interest has been discharged (whether
before or after judgment).
In no event shall any interest charged, collected or reserved under this
Note exceed the maximum rate then permitted by applicable law and if any such
payment is paid by the Maker, then such excess sum shall be credited by the
holder as a payment of principal.
All payments by the Maker under this Note shall be made without set-off or
counterclaim and be free and clear and without any deduction or withholding for
any taxes or fees of any nature whatever, unless the obligation to make such
deduction or withholding is imposed by law. The Maker shall pay and save the
holder harmless from all liabilities with respect to or resulting from any delay
or omission to make any such deduction or withholding required by law.
Whenever any amount is paid under this Note, all or part of the amount paid
may be applied to principal, premium or interest in such order and manner as
shall be determined by the holder in its discretion.
No reference in this Note to any guaranty shall impair the obligation of
the Maker, which is absolute and unconditional, to pay all amounts under this
Note strictly in accordance with the terms of this Note.
The Maker agrees to pay on demand all costs of collection, including
reasonable attorneys' fees, incurred by the holder in enforcing the obligations
of the Maker under this Note.
No delay or omission on the part of the holder in exercising any right
under this Note shall operate as a waiver of such right or of any other right of
such holder, nor shall any delay, omission or waiver on any one occasion be
deemed a bar to or waiver of the same or any other right on any future occasion.
The Maker and every indorser or guarantor of this Note regardless of the time,
order or place of signing waives presentment, demand, protest and notices of
every kind and assents to any extension or postponement of the time of payment
or any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or
secondarily liable.
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This Note may be prepaid in whole or in part at any time or from time to
time without prior written notice. Any such prepayment shall be without premium
or penalty.
None of the terms or provisions of this Note may be excluded, modified or
amended except by a written instrument duly executed on behalf of the holder
expressly referring to this Note and setting forth the provision so excluded,
modified or amended.
All rights and obligations hereunder shall be governed by the laws of the
Commonwealth of Massachusetts and this Note is executed as an instrument under
seal.
ATTEST: VISION-SCIENCES, INC.
By: /s/ Amy Pace By: /s/ James A. Tracy
Title: Accounting Manager Title: Vice President Finance
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