Exhibit 10.2
 
 
SUPPLEMENT
to the
Loan and Security Agreement
dated as of June 29, 2011
between
Oculus Innovative Sciences, Inc. (“Borrower”)
and
Venture Lending & Leasing VI, Inc. (“Lender”)
 

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This is a Supplement identified in the document entitled Loan and Security
Agreement dated as of June 29, 2011, as the same may be amended, restated,
supplemented and modified from time to time (the “Loan and Security Agreement”),
by and between Borrower and Lender.  All capitalized terms used in this
Supplement and not otherwise defined in this Supplement have the meanings
ascribed to them in Article 10 of the Loan and Security Agreement, which is
incorporated in its entirety into this Supplement.  In the event of any
inconsistency between the provisions of that document and this Supplement, this
Supplement is controlling.

In addition to the provisions of the Loan and Security Agreement, the parties
agree as follows:

Part 1. - Additional Definitions:

“Commitment” Subject to the terms and conditions set forth in the Loan and
Security Agreement and this Supplement, Lender commits to make Growth Capital
Loans to Borrower up to the aggregate original principal amount of Two Million
Five Hundred Thousand Dollars ($2,500,000).  The Commitment shall be divided
into two tranches in the following amounts:  (i) One Million Five Hundred
Thousand Dollars ($1,500,000), which shall be referred to herein as the “First
Tranche” of the Commitment; and (ii) One Million Dollars ($1,000,000), which
shall be referred to herein as the “Second Tranche” of the Commitment.

“Designated Rate”:  The Designated Rate for each Loan shall be a fixed rate of
interest per annum equal to the Prime Rate as published on the Business Day on
which Lender prepares the Note for such Loan, plus six and three-quarters of one
percent (6.75%); provided, however, that in no event shall the Designated Rate
for a Loan be less than ten percent (10.00%).

“Final Payment”: Each Growth Capital Loan shall have a Final Payment equal to
seven and 767/1000 percent (7.767%) of the original principal amount of such
Growth Capital Loan.

“Growth Capital Loan” means any Loan requested by Borrower and funded by Lender
under its Commitment for general corporate purposes of Borrower.  Growth Capital
Loans are sometimes referred to herein individually as a “Loan” or collectively
as “Loans”.

“Interest-Only Rate”:  The Interest-Only Rate for each Loan shall be a fixed
rate of interest per annum equal to ten percent (10.00%).

“Interim Rate”:  The Interim Rate for each Loan shall be a fixed rate of
interest per annum equal to thirteen percent (13.00%).

“Loan Commencement Date” means, with respect to a Loan, (i) the first day of the
first full calendar month following the Borrowing Date of such Loan if such
Borrowing Date is not the first day of a month; or (ii) the same day as the
Borrowing Date if the Borrowing Date is the first day of a month.

“Prime Rate” means the “prime rate” of interest, as published from time to time
by The Wall Street Journal in the “Money Rates” section of its Western Edition
newspaper.
 
 
 

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“Termination Date”: The Termination Date is the earlier of (i) the date Lender
may terminate making Loans or extending other credit pursuant to the rights of
Lender under Article 7 of the Loan and Security Agreement, or (ii) (A) with
respect to the First Tranche of the Commitment, the earlier of (x) two (2)
Business Days following the Closing Date or (y) June 30, 2011; and (B) with
respect to the Second Tranche of the Commitment, November 30, 2011.

“Threshold Amount” means Fifty Thousand Dollars ($50,000).

Part 2. - Additional Covenants and Conditions:

1.         Growth Capital Loan Facility.

(a)           Funding of Growth Capital Loan under First Tranche of
Commitment. Subject to the terms and conditions of the Loan and Security
Agreement and this Supplement, Lender agrees to make a Growth Capital Loan to
Borrower under the First Tranche of the Commitment from the Closing Date up to
and including the applicable Termination Date in an original principal amount
equal to but not exceeding the First Tranche of the Commitment.

(b)           Funding of Growth Capital Loan under Second Tranche of Commitment;
Additional Condition Precedent Regarding Second Tranche.  In addition to the
satisfaction of all the other conditions precedent specified in Article 4.2 of
the Loan and Security Agreement and this Supplement, Lender’s obligation to fund
the Growth Capital Loan under the Second Tranche of the Commitment is subject to
receipt by Lender of evidence satisfactory to it, as determined by Lender in its
reasonable judgment, that Borrower has achieved certain financial milestones, as
determined by  Borrower and Lender on the date hereof (the “Second Tranche
Milestone”).  Subject to the foregoing and the other conditions precedent
specified in Article 4.2 of the Loan and Security Agreement and this Supplement,
Lender agrees to make a Growth Capital Loan to Borrower under the Second Tranche
of the Commitment on from and after the date Borrower satisfies the Second
Tranche Milestone up to and including the applicable Termination Date in an
original principal amount equal to but not exceeding the Second Tranche of the
Commitment.

(c)           Minimum Funding Amount; Maximum Number of Borrowing
Requests.  Except to the extent the remaining Commitment is a lesser amount,
each Growth Capital Loan requested by Borrower to be made on a single Business
Day shall be for a minimum original principal amount of One Hundred Thousand
Dollars ($100,000).  Borrower shall not submit a Borrowing Request more
frequently than once each month.

(d)           Repayment of Growth Capital Loans.  Principal of and interest on
each Growth Capital Loan shall be payable as set forth in a Note evidencing such
Loan (substantially in the form attached hereto as Exhibit “A”), which Note
shall provide substantially as follows:  principal and interest at the
Designated Rate shall be fully amortized over a period of thirty (30) months in
equal, monthly installments, commencing after a nine (9) month period of
interest-only payments at the Interest-Only Rate.  In particular, on the
Borrowing Date applicable to such Growth Capital Loan, Borrower shall pay to
Lender:  (i) if the Borrowing Date is earlier than the Loan Commencement Date,
interest only at the Interim Rate, in advance, on the outstanding principal
balance of the Growth Capital Loan for the period from the Borrowing Date
through the last day of the calendar month in which such Borrowing Date occurs,
and (ii) a first (1st) interest only installment at the Interest-Only Rate, in
advance, on the outstanding principal balance of the Note for the ensuing
month.  Commencing on the first day of the second full month after the Borrowing
Date and continuing on the first day of the third, fourth, fifth, sixth,
seventh, eighth and ninth full months after the Borrowing Date, Borrower shall
pay interest at the Interest-Only Rate, in advance, on the outstanding principal
balance of the Loan evidenced by such Note for the ensuing month.  Commencing on
the first day of the tenth full month after the Borrowing Date and continuing on
the first day of each consecutive calendar month thereafter, principal and
interest at the Designated Rate shall be payable, in advance, in 30 equal
consecutive monthly installments.  Borrower shall pay the Final Payment to
Lender on the date on which the final amortization payment is due and
payable.  For purposes of illustration and not of limitation, attached hereto as
Exhibit “H” is an Amortization Schedule that describes the repayment term of the
Loan based upon the facts set forth therein for purposes of such illustration.
 
 
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2.         Prepayment of Loans.  No Loan may be voluntarily prepaid except as
provided in this Section 2.  Borrower may voluntarily prepay all, but not less
than all, Loans in whole, but not in part, at any time by tendering to Lender
cash payment in respect of such Loans in an amount equal to the sum of:  (i) all
accrued and unpaid interest on such Loans as of the date of prepayment; (ii) all
outstanding principal balances of such Loans as of the date of prepayment; (iii)
the undiscounted Final Payment(s); and (iv) an amount equal to the total amount
of all of the interest that would have accrued and been payable from the date of
prepayment through the stated maturity of the Loans had they remained
outstanding and been paid in accordance with the terms of the related Note(s).

3.         Forbearance of Exercise of Remedies Against Intellectual Property.

(a)           Notwithstanding anything to the contrary contained in Article 7
and 8 of the Loan and Security Agreement or elsewhere in the Loan Documents
(including the Intellectual Property Security Agreement executed and delivered
by Borrower pursuant to Section 4.1(m) of the Loan and Security Agreement),
following the occurrence and during the continuance of an Event of Default,
other than an Event of Default under Section 7.1(c)(ii) or an Event of Default
under Section 7.1(f) of the Loan and Security Agreement, Lender agrees to
forbear from selling, leasing, licensing or otherwise disposing of any
Collateral comprising Intellectual Property (“Intellectual Property Collateral”)
for a period of up to sixty (60) days after the occurrence of such Event of
Default (such period being referred to herein as a “Forbearance Period”),
provided that at all times during the Forbearance Period:

(i)            Borrower shall continue to have a duly constituted and acting
board of directors, and executive management actively involved in Borrower’s
operations who have not resigned their positions;

(ii)           Borrower is able to demonstrate to Lender that Borrower is
exercising on a continuous and diligent basis reasonable commercial efforts to
resolve such Event of Default or consummate a financing or other transaction
that will enable it to satisfy and discharge its Obligations to Lender;

(iii)          Borrower shall cooperate with Lender in its exercise of rights
under Section 5.9(a) of the Loan and Security Agreement;

(iv)          No Insolvency Proceeding is commenced by or against Borrower; and

(v)           No Person who holds or acquires a Lien on or against all or any
material portion of the Intellectual Property Collateral actually exercises
foreclosure or similar remedies against such property.

Subject to paragraph (b) below, upon the non-occurrence of any of the events
under clauses (i) through (v) above, the Forbearance Period shall immediately
and automatically terminate and Lender may thereupon commence, continue and
complete any exercise of its rights and remedies against Intellectual Property
Collateral, all as provided in the Loan Documents and under applicable law.

 
3

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(b)           If during the Forbearance Period, Lender proposes or arranges a
private or public sale of all or a material portion of the Intellectual Property
Collateral (which sale shall not be consummated during the Forbearance Period),
Lender shall give notice of such proposed sale to Borrower, including notice of
the minimum price to be paid or bid in such sale.  If Borrower’s Board of
Director determines in good faith that the proposed sale would not be
commercially reasonable, then Borrower may, within five (5) Business Days of
receipt of the initial notice from Lender, deliver a written objection,
following which the parties agree to meet promptly and to confer in good faith
to resolve any disagreements as to value or the proposed sale.  Unless the
parties have otherwise agreed as a result of such meet-and-confer, Borrower
shall obtain, at its sole expense, within thirty (30) days after the initial
notice from Lender, a written appraisal of the orderly liquidation value of the
Intellectual Property, prepared by a recognized, independent appraiser with
experience evaluating similar types of property (in which event, the 60-day
limitation on the Forbearance Period shall be extended if, and only as,
necessary to afford Borrower the full thirty (30) days to obtain such
appraisal).  If such appraisal is not timely delivered, or if the value
concluded by the independent appraisal is not more than one hundred twenty
percent (120%) of the minimum price or bid in any transaction proposed by Lender
for the same Intellectual Property Collateral, then Lender may proceed with the
proposed transaction (but not sooner than 60 days after the occurrence of an
Event of Default unless Borrower approves otherwise) on price terms not
materially more favorable to the transferee than originally proposed by
Lender.  If the value concluded by the independent appraisal is more than one
hundred twenty percent (120%) of the minimum price or bid in any transaction
proposed by Lender, then the 60-day limitation on the Forbearance Period (as may
have been extended for the appraisal as aforesaid) shall be extended and the
parties shall cooperate with one another to realize the higher valuation,
provided that if the Forbearance Period (as so extended) terminates for any
reason other than that set forth in clause (ii) of paragraph (a) above, Lender
may thereupon commence, continue and complete any exercise of its rights and
remedies against Intellectual Property Collateral, all as provided in the Loan
Documents and under applicable law, and in all events, Lender shall be free to
enforce such rights and remedies and complete one or more sales or other
dispositions of the Intellectual Property after the earlier of (i) one hundred
twenty (120) days after the occurrence of the Event of Default, or (ii) sixty
(60) days after the delivery of the appraisal report to Borrower.

(c)           At any time during the Forbearance Period, Lender will discontinue
and forbear from enforcing its rights and remedies against the Collateral upon
tender to Lender by Borrower or by another Person for its account all amounts
payable under Section 2 of Part 2 hereunder.

4.         Issuance of Warrants.  As additional consideration for the making of
the Commitment, Lender has earned and is entitled to receive immediately upon
the execution of the Loan and Security Agreement and this Supplement, warrant
instruments issued by Borrower substantially in the forms attached hereto as
Exhibit “D-1”, Exhibit “D-2” and Exhibit “D-3” (the “Warrants”).  Borrower
acknowledges that Lender has assigned its rights to receive the Warrants to its
parent, Venture Lending & Leasing VI, LLC (“LLC”).  In connection therewith,
Borrower shall issue the Warrants directly to LLC.  Upon request of Borrower,
Lender shall furnish to Borrower a copy of the agreement in which Lender
assigned its rights to receive the Warrants to LLC

5.         Commitment Fee.  As an additional condition precedent under Section
4.1 of the Loan and Security Agreement, Lender shall have completed to its
satisfaction its due diligence review of Borrower’s business and financial
condition and prospects and Lender’s investment committee shall have approved
its Commitment.  If this condition is not satisfied, the Twenty Five Thousand
Dollar ($25,000) commitment fee (the “Commitment Fee”) previously paid by
Borrower shall be refunded.  Lender agrees that with respect to each Loan
advanced by it under the Commitment, on the Borrowing Date applicable to such
Loan, Lender shall credit against the payments due from Borrower on such date in
respect of such Loan an amount equal to the product of Twenty Five Thousand
Dollars ($25,000) and a fraction, the numerator of which is the principal amount
of such Loan and the denominator of which is Two Million Five Hundred Thousand
Dollars ($2,500,000), until the aggregate amount of such credits equals but does
not exceed Twenty Five Thousand Dollars ($25,000).  Except as set forth in this
section, the Commitment Fee is not refundable.

6.         Documentation Fee Payment.  Pursuant to Section 9.8(a) of the Loan
and Security Agreement Borrower shall pay Lender, on demand, the total amount of
Lender’s actual costs and expenses incurred in connection with the preparation
and negotiation of the Loan Documents, including reasonable legal fees not to
exceed $15,000 and Lender’s actual costs and filing fees related to perfection
of its Liens in the United States and abroad.

7.         Borrower’s Account and Wire Transfer Instructions.  Borrower’s
Primary Operating Account and Wire Transfer Instructions shall be provided to
Lender on or prior to the Closing Date.
 
 
4

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8.         Debits to Account for ACH Transfers.  For purposes of Section 2.2 and
5.10 of the Loan and Security Agreement, Borrower’s Primary Operating Account
shall be the bank account set forth in Section 7 above.  Borrower hereby agrees
that Loans will be advanced to the account specified above and regularly
scheduled monthly payments of principal and interest and any Final Payments will
be automatically debited from the same account.

Part 3. - Additional Representations:

Borrower represents and warrants that as of the Closing Date and each Borrowing
Date:

 
a)
Its chief executive office is located at: 1129 North McDowell Boulevard,
Petaluma, CA 94954.

 
b)
Its Equipment is located at:  1129 North McDowell Blvd., Petaluma, CA 94954

 
c)
Its Records are located at:  1129 North McDowell Blvd., Petaluma, CA 94954

 
d)
Its Inventory is located at 1129 North McDowell Blvd., Petaluma, CA 94954, and
at various distributor warehouse sites and at the Borrowers’ premises, as
referenced below.

 
e)
In addition to its chief executive office, Borrower maintains offices or
operates its business at the following locations:

Aquamed Technologies
1129 N. McDowell Blvd.
Petaluma, CA 94954
USA

MicroMed Laboratories, Inc.
1129 N. McDowell Blvd.
Petaluma, CA 94954
USA

L3 Pharmaceuticals, Inc.
1129 N. McDowell Blvd.
Petaluma, CA 94954
USA

Oculus Technologies of Mexico S.A. de C.V.
Industria Vidriera 81 de la Calle
Fracc Industrial Zapopan Norte
Zapopan, Jalisco
México
45130 (manufacturing and administration)

Pedro Martinez Rivas 861
Parque Industrial Belenes Norte
Zapopan, Jalisco
México
45150 (warehouse)
 
 
5

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Oculus Innovative Sciences Netherlands B.V.
Nusterweg 123
6136 KT  Sittard
P.O. Box 5056
6130 PB  Sittard
The Netherlands

 
f)
Other than its full corporate name, Borrower has conducted business using the
following trade names or fictitious business names: Micromed Laboratories, Inc.;
OIS Reincorporation Sub, Inc.

 
g)
Borrower’s Federal Tax I.D. number is: 68-0423298

 
h)
Borrower’s Delaware state corporation I.D. number is: 4254674

 
i)
Borrower is a majority owner of or in a control relationship with the following
business entities:

Aquamed Technologies
1129 N. McDowell Blvd.
Petaluma, CA 94954
USA

MicroMed Laboratories, Inc.
1129 N. McDowell Blvd.
Petaluma, CA 94954
USA
(corporation formed but shares not yet issued)

L3 Pharmaceuticals, Inc.
1129 N. McDowell Blvd.
Petaluma, CA 94954
USA
(corporation formed but shares not yet issued)

Oculus Technologies of Mexico S.A. de C.V.
Industria Vidriera 81
Fracc Industrial Zapopan Norte
Zapopan, Jalisco
México
45130

Oculus Innovative Sciences Netherlands B.V.
Nusterweg 123
6136 KT  Sittard
P.O. Box 5056
6130 PB  Sittard
The Netherlands

 
j)
Borrower’s Deposit and Securities Accounts:  Including the Primary Operating
Account identified in Part 2, Section 7, it maintains certain Deposit Accounts
and investment/securities accounts, which shall be provided to Lender on or
prior to the Closing Date.

 
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Part 4. - Additional Loan Documents:

Form of Promissory Note
 
Exhibit “A”
Form of Borrowing Request
 
Exhibit “B”
Form of Compliance Certificate
 
Exhibit “C”
Forms of Warrants
 
Exhibit “D-1”, “D-2” and “D-3”
Form of Legal Opinion
 
Exhibit “E”
Reserved
 
Exhibit “F”
Form of Intellectual Property Security Agreement
 
Exhibit “G”
Amortization Schedule
 
Exhibit “H”

 
[Signature Page Follows]
 
 
7

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[Signature page to Supplement]

IN WITNESS WHEREOF, the parties have executed this Supplement as of the date
first above written.

 
BORROWER:
     
OCULUS INNOVATIVE SCIENCES, INC.
     
By:
/s/ Robert E. Miller  
Name: 
Robert E. Miller  
Title:
CFO

 
Address for Notices:
1129 North McDowell Boulevard
 
Petaluma, CA  94954
 
Attn:  
John Dal Poggetto   Fax # 707-283-0551   Phone #     707-559-7239

 

 
LENDER:
     
VENTURE LENDING & LEASING VI, INC.
     
By:
/s/ David Wanek  
Name: 
David Wanek  
Title:
Vice President    
Address for Notices:
2010 North First Street, Suite 310
 
San Jose, California 95131
 
Attn:  Chief Financial Officer
 
Fax # 408-436-8625
 
Phone # 408-436-8577

 
 
 

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EXHIBIT “A”

FORM OF PROMISSORY NOTE

 [Note No. X-XXX]

$____________________
____________________, 2011
 
San Jose, California

 
The undersigned (“Borrower”) promises to pay to the order of VENTURE LENDING &
LEASING VI, INC., a Maryland corporation (“Lender”) at its office at 2010 North
First Street, Suite 310, San Jose, California 95131, or at such other place as
Lender may designate in writing, in lawful money of the United States of
America, the principal sum of ______________________________ Dollars
($__________), with interest thereon from the date hereof until maturity,
whether scheduled or accelerated, at a fixed rate per annum equal to [the Prime
Rate as published on the Business Day on which Lender prepares this Note plus
6.75%, but in no event less than 10.00%] (the “Designated Rate”), except as
otherwise provided herein, according to the payment schedule described herein,
and a Final Payment in the sum of [7.767% of face amount] Dollars
($____________) payable on the date set forth below.

This Note is one of the Notes referred to in, and is entitled to all the
benefits of, a Loan and Security Agreement dated as of  June 29, 2011, between
Borrower and Lender (as amended, restated and supplemented from time to time,
the “Loan Agreement”).  Each capitalized term not otherwise defined herein shall
have the meaning set forth in the Loan Agreement.  The Loan Agreement contains
provisions for the acceleration of the maturity of this Note upon the happening
of certain stated events.

Principal of and interest on this Note shall be payable as follows:

On the Borrowing Date, Borrower shall pay [(i) if the Borrowing Date is not the
first day of the month:  interest only at a fixed rate per annum equal to
13.00%, in advance, on the outstanding principal balance of this Note for the
period from the Borrowing Date through    [the last day of the same month]___;
and (ii)] interest only at a fixed rate per annum equal to 10.00% (the
“Interest-Only Rate”), in advance, on the outstanding principal balance of this
Note in the amount of $_____________ for the month of [date of first regular
interest only installment].

Commencing on the first day of the second full month after the Borrowing Date,
and continuing on the first day of each of the third, fourth, fifth, sixth,
seventh, eighth and ninth months thereafter, Borrower shall make payments, in
advance, of interest only at the Interest-Only Rate on the outstanding principal
balance of this Note in the amount of $_____________ each.

Commencing on [the first day of the tenth full month after the Borrowing Date],
and continuing on the first day of each consecutive month thereafter, principal
and interest at the Designated Rate shall be payable, in advance, in thirty (30)
equal consecutive installments of _________________________________ Dollars
($__________) each.  The Final Payment and any unpaid expenses, fees, interest
and principal shall be due and payable on          [same date of the last
amortized payment].

This Note may be voluntarily prepaid only as permitted under Section 2 of Part 2
of the Supplement to the Loan Agreement.
 
 
 

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Any unpaid payments of principal or interest on this Note shall bear interest
from their respective maturities, whether scheduled or accelerated, at a rate
per annum equal to the Default Rate.  Borrower shall pay such interest on
demand.

Interest, charges and fees shall be calculated for actual days elapsed on the
basis of a 360-day year, which results in higher interest, charge or fee
payments than if a 365-day year were used.  In no event shall Borrower be
obligated to pay interest, charges or fees at a rate in excess of the highest
rate permitted by applicable law from time to time in effect.

If Borrower is late in making any payment under this Note by more than five (5)
business days, Borrower agrees to pay a “late charge” of five percent (5%) of
the installment due, but not less than fifty dollars ($50.00) for any one such
delinquent payment.  This late charge may be charged by Lender for the purpose
of defraying the expenses incidental to the handling of such delinquent
amounts.  Borrower acknowledges that such late charge represents a reasonable
sum considering all of the circumstances existing on the date of this Note and
represents a fair and reasonable estimate of the costs that will be sustained by
Lender due to the failure of Borrower to make timely payments.  Borrower further
agrees that proof of actual damages would be costly and inconvenient.  Such late
charge shall be paid without prejudice to the right of Lender to collect any
other amounts provided to be paid or to declare a default under this Note or any
of the other Loan Documents or from exercising any other rights and remedies of
Lender.

This Note shall be governed by, and construed in accordance with, the laws of
the State of California without reference to its conflict of laws principles.

 
OCULUS INNOVATIVE SCIENCES, INC.
       
By:
   
Name:  
   
Its:
 

 
 

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EXHIBIT “B”

FORM OF BORROWING REQUEST

[Date]
 
Venture Lending & Leasing VI, Inc.
2010 North First Street, Suite 310
San Jose, CA 95131

 
Re:
Oculus Innovative Sciences, Inc.

Ladies and Gentlemen:

Reference is made to the Loan and Security Agreement dated as of June 29, 2011
(as amended, restated and supplemented from time to time, the “Loan Agreement”,
the capitalized terms used herein as defined therein), between Venture Lending &
Leasing VI, Inc. (“VLL”) and Oculus Innovative Sciences, Inc. (the “Company”).

The undersigned is the _____________________ of the Company, and hereby requests
on behalf of the Company a Loan under the Loan Agreement, and in that connection
certifies as follows:

1.           The amount of the proposed Loan is ___________________________ and
__/100 Dollars ($______________).  The Borrowing Date of the proposed Loan is
___________ __, 200___.
 
2.           [If this Growth Capital Loan is the Loan to be financed under the
Second Tranche of the Commitment].  The proposed Growth Capital Loan is the Loan
to be financed under the Second Tranche of the Commitment.  Accordingly, the
Company has demonstrated to VLL, and hereby represents and warrants, that the
Company has achieved the Second Tranche Milestone (as defined in Section 1(b) of
Part 2 of the Supplement).

3.           As of this date, no Default or Event of Default has occurred and is
continuing, or will result from the making of the proposed Loan, the
representations and warranties of the Company contained in Article 3 of the Loan
Agreement and Part 3 of the Supplement are true and correct in all material
respects, and the applicable conditions precedent described in Article 4 of the
Loan Agreement and Part 2 of the Supplement have been met.

4.           No event has occurred that has had or could reasonably be expected
to have a Material Adverse Change.

5.           The Company’s most recent financial projections or business plan
dated ____________, as approved by the Company’s Board of Directors on
_______________, are enclosed herewith in the event such financial projections
or business plan have not been previously provided to VLL.
 
[Remainder of this page intentionally left blank; signature page follows]
 
 
 

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The Company shall notify you promptly before the funding of the Loan if any of
the matters to which I have certified above shall not be true and correct on the
Borrowing Date.

Very truly yours,     OCULUS INNOVATIVE SCIENCES, INC.     By:   Name:    
Title:*  

 
 
 

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* Must be executed by the Company’s Chief Financial Officer or other executive
officer.
 
 
 

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EXHIBIT “C”

FORM OF
COMPLIANCE CERTIFICATE
 
Venture Lending & Leasing VI, Inc.
2010 North First Street, Suite 310
San Jose, CA 95131

Re:          Oculus Innovative Sciences, Inc.

Ladies and Gentlemen:

Reference is made to the Loan and Security Agreement dated as of June 29, 2011
(as the same have been and may be supplemented, amended and modified from time
to time, the “Loan Agreement,” the capitalized terms used herein as defined
therein), between Venture Lending & Leasing VI, Inc. (“Lender”) and Oculus
Innovative Sciences, Inc. (the “Company”).

The undersigned authorized representative of the Company hereby certifies in
such capacity that in accordance with the terms and conditions of the Loan
Agreement, (i) no Default or Event of Default has occurred and is continuing,
except as noted below, and (ii) the Company is in complete compliance for the
financial reporting period ending ___________ with all required financial
reporting under the Loan Agreement, except as noted below.  Attached herewith
are the required documents supporting the foregoing certification.  The
undersigned further certifies that the accompanying financial statements have
been prepared in accordance with the Company’s past practices applied on a
consistent basis throughout the periods indicated.  The financial statements
fairly present in all material respects the financial condition and operating
results of the Company and its subsidiaries as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustments, except
as explained below.

REPORTING REQUIREMENT
REQUIRED
COMPLIES
     
Indicate compliance status by circling Yes/No under “Complies”:
     
Interim Financial Statements
Quarterly within 45 days
YES / NO
     
Operating Budgets/
   
Updated Capitalization Tables
As modified
YES / NO
     
Audited Annual Financial Statements
Annually upon delivery to SEC
YES / NO
     
List of Collateral in excess of $75,000
Quarterly
YES/NO
and locations at which such Collateral
   
is maintained
   

Any Patents, Trademarks and Copyrights applied
and/or filed with the U.S. Patent &
Trademark Office or U.S. Copyright Office
during the quarter ending ______________?  YES/NO
If YES, please list by application/registration number and title

Date of most recent Board-approved budget/plan:  ____________________
Any change in budget/plan since version most recently delivered to
Lender?  YES/NO
If YES, please attach

Has the Company achieved the Second Tranche Milestone?  YES / NO
 
 
 

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ACCOUNT CONTROL AGREEMENTS

Pursuant to Section 6.11 of the Loan Agreement, Company represents and warrants
that: (i) as of the date hereof, it maintains only those deposit and investment
accounts set forth below; and (ii) a control agreement has been executed and
delivered to Lender with respect to each such account [Note: If the Company has
established any new account(s) since the date of the last compliance
certificate, please so indicate].

Deposit Accounts                                
 

   
Name of Institution
 
Account Number
 
Control Agt.
In place?
 
Complies
 
New
Account
 
1.)
 
 
 
 
 
 
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
2.)
 
 
 
 
 
 
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
3.)
 
 
 
 
 
 
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
4.)
 
 
 
 
 
 
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO

 
Investment Accounts

   
Name of Institution
 
Account Number
 
Control Agt.
In place?
 
Complies
 
New
Account
 
1.)
 
 
 
 
 
 
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
2.)
 
 
 
 
 
 
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
3.)
 
 
 
 
 
 
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
4.)
 
 
 
 
 
 
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO

 
AGREEMENTS WITH PERSONS IN POSSESSION OF TANGIBLE COLLATERAL

Pursuant to Section 5.9(e) of the Loan Agreement, the Company represents and
warrants that: (i) as of the date hereof, tangible Collateral is located at the
addresses set forth below; and (ii) a Waiver has been executed and delivered to
Lender with respect to each such location at which the value of the Collateral
located there is greater than $200,000 [Note: If the Company has located
Collateral at any new location since the date of the last compliance
certificate, please so indicate].
 

   
Location of Collateral
 
Value of Collateral at such
Locations
 
Waiver
In place?
 
Complies?
 
New
Location?
 
1.)
 
 
 
 
 
$
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
2.)
 
 
 
 
 
$
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
3.)
 
 
 
 
 
$
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO
 
4.)
 
 
 
 
 
$
 
 
YES / NO
 
 
YES / NO
 
 
YES / NO

 
 

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EXPLANATIONS
 

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Very truly yours,
     
OCULUS INNOVATIVE SCIENCES, INC.
     
By:
    
 
Name:
 
Title:*

 
 
 
 
 
 

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* Must be executed by Company’s Chief Financial Officer or other executive
officer.

 
 

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