Exhibit 10.66

 

Oculus Innovative Sciences, Inc.

1129 North McDowell Boulevard

Petaluma, CA 94954

 

November 6, 2013

VIA EMAIL

 

Venture Lending & Leasing V, Inc.

Venture Lending & Leasing VI, Inc.

104 La Mesa Drive, Suite 102

Portola Valley, CA 94028

 

Re: Letter of Credit

 

Ladies and Gentlemen:

 

Reference is hereby made to (i) that certain Loan and Security Agreement and
Supplement thereto, both dated as of May 1, 2010 (together, as the same has been
and may be amended, supplemented, extended, renewed or otherwise modified from
time to time, the “VLL5 Loan Agreement”), between Oculus Innovative Sciences,
Inc., a Delaware corporation (“Borrower”), and Venture Lending & Leasing V,
Inc., as lender (“VLL5”), and (ii) that certain Loan and Security Agreement and
Supplement thereto, both dated as of June 29, 2011 (together, as the same has
been and may be amended, supplemented, extended, renewed or otherwise modified
from time to time, the “VLL6 Loan Agreement” and sometimes referred to herein
individually with the VLL5 Loan Agreement, as a “Loan Agreement” and together,
as the “Loan Agreements”), between Borrower and Venture Lending & Leasing VI,
Inc., as lender (“VLL6” and sometimes referred to herein individually with the
VLL5, as a “Lender” and together, as “Lenders”). Except where the context
otherwise requires, or unless this letter agreement (this “Letter Agreement”)
otherwise provides, all words and expressions defined in the Loan Agreements
when used or referred to in this Letter Agreement shall have the same meanings
as those provided for in the Loan Agreements. For the purposes of clarity, the
definition of “Collateral” shall have the meaning as set forth in the waiver
agreement (the “Waiver”) made by and between the Lenders and the Borrower on
August 10, 2012.

 

Borrower previously notified Lenders that Borrower’s wholly owned subsidiary,
Ruthigen, Inc., a Delaware corporation (“Ruthigen”), intends to consummate an
initial underwritten public offering of Ruthigen’s equity interests (the
“Ruthigen Shares”) pursuant to a registration statement on Form S-1 filed with
the Securities and Exchange Commission under the federal Securities Act of 1933,
as amended (the “IPO”). All Ruthigen Shares issued on or after the date hereof
to parties other than Borrower are hereinafter referred to as the “Applicable
Ruthigen Shares.” To the extent that the Applicable Ruthigen Shares constitute
Collateral for the Obligations under the Loan Agreements and the other Loan
Documents, it is a condition precedent to the IPO that the Applicable Ruthigen
Shares be free and clear of Lenders’ Liens thereon in order to consummate the
IPO. In order to facilitate the IPO, Borrower and each of Lenders agree to the
terms and conditions set forth in this Letter Agreement.

 

1.Prior to the pricing of the IPO, Wells Fargo Bank, N.A and its successors and
assigns (“Wells Fargo”) shall issue one or more irrevocable standby letters of
credit for Borrower’s account in favor of Lenders, in form and substance
reasonably satisfactory to Lenders (individually and collectively, the “Letter
of Credit”), in a total amount equal to all scheduled payments of principal and
interest payable under the Loan Agreements at the time of execution of such
Letter of Credit, to secure all of the Borrower’s Obligations under the Loan
Agreements. The Letter of Credit shall be maintained in effect for the period
from the date of issuance and continuing until the date that all of the
Borrower’s Obligations under the Loan Agreements have been paid in full. Lenders
are willing to accept such Letter of Credit as a condition to continuing the
credit accommodations outstanding under the Loan Agreements and in consideration
of the release and discharge by Lenders of all Liens which they have or have had
in any or all of the Applicable Ruthigen Shares pursuant to the provisions of
the Loan Agreements. Such waiver shall be given by Lenders concurrently with
Lenders’ receipt of such Letter of Credit, in form substantially similar to
Exhibit A attached hereto.

 

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2.Borrower hereby covenants and agrees that Borrower will take all action within
its power and authority necessary or desirable to keep the Letter of Credit in
full force and effect. Borrower further agrees that it will take all action
within its power and authority necessary or desirable to cause Wells Fargo to
pay in accordance with the terms and provisions of the Letter of Credit upon the
occurrence of an Event of Default that gives rise to a contractual or legal
right to draw upon the Letter of Credit. In furtherance of the foregoing,
Borrower agrees that the Letter of Credit shall be honored by Wells Fargo upon
the occurrence of such Event of Default.

 

3.Each of Lenders hereby covenants and agrees that (a) such Lender will draw
upon such Letter of Credit only following the occurrence of an Event of Default
and in accordance with the terms of the Loan Agreements, and (b) Borrower has
the right to reduce the amount subject to such Letter of Credit as it pays down
the Obligations owed under the Loan Agreements, however in no event will the
Letter of Credit be less than the Obligations. Borrower hereby acknowledges and
agrees that each Lender is entering into this Letter Agreement in material
reliance upon the ability of such Lender to draw upon the Letter of Credit upon
the occurrence of any Event of Default. If an Event of Default occurs, either
Lender may, without notice to Borrower, draw upon the Letter of Credit, in part
or in whole. Borrower agrees not to interfere in any way with payment to either
Lender of the proceeds of the Letter of Credit, either prior to or following a
draw by either Lender of any portion of the Letter of Credit. No condition or
term of the Loan Documents shall be deemed to render the Letter of Credit
conditional to justify the issuer of the Letter of Credit in failing to honor a
drawing upon such Letter of Credit in a timely manner. Borrower agrees and
acknowledges that (i) the Letter of Credit constitutes a separate and
independent contract between each Lender and the Wells Fargo, (ii) Borrower is
not a third party beneficiary of such contract, (iii) Borrower has no property
interest whatsoever in the Letter of Credit or the proceeds thereof, and (iv) in
the event Borrower becomes a debtor under any chapter of the Bankruptcy Code,
neither Borrower, any trustee, nor Borrower’s bankruptcy estate shall have any
right to restrict or limit either Lender’s claim and/or rights to the Letter of
Credit and/or the proceeds thereof by application of any provision of the
U. S. Bankruptcy Code or otherwise.

 

This Letter Agreement constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof,
and there are no other agreements, understandings, representations or
understandings, other than those expressly stated in this Letter Agreement.
Except as expressly amended by this Letter Agreement, the Loan Agreements and
the other Loan Documents remain unamended and in full force and effect. All
legal fees and costs incurred by Lenders in connection with the preparation,
negotiation and execution hereof shall be reimbursed by Borrower upon demand.
This Letter Agreement may be executed in any number of counterparts, including
counterparts transmitted by facsimile or electronic transmission, each of which
shall be an original, but all of which together shall constitute one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.

 

 

[Remainder of page intentionally left blank; signature page follows.]

 

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Please indicate your agreement to the foregoing by executing and returning a
copy of this Letter Agreement.

 

Very truly yours,

 

OCULUS INNOVATIVE SCIENCES, INC.

 

 

By: /s/ Jim Schutz                        

Name:  Jim Schutz

Title:    Chief Executive Officer

 

 

Acknowledged and agreed as of the date set forth above:

 

VENTURE LENDING & LEASING V, INC.

 

 

By: /s/ Maurice Werdegar

Name: Maurice Werdegar

Title: President and CEO

 

VENTURE LENDING & LEASING VI, INC.

 

 

By: /s/ Maurice Werdegar

Name: Maurice Werdegar

Title: President and CEO

 

 

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Exhibit A

 

Venture Lending & Leasing V, Inc.

Venture Lending & Leasing VI, Inc.

104 La Mesa Drive, Suite 102

Portola Valley, CA 94028

 

 

________________, 2013

 

Via Email

 

Oculus Innovative Sciences, Inc.

1129 North McDowell Boulevard

Petaluma, CA 94954

 

Re:Release of Certain Conditions Applicable to Ruthigen, Inc.

 

Ladies and Gentlemen:

 

Reference is hereby made to (i) that certain Loan and Security Agreement and
Supplement thereto, both dated as of May 1, 2010 (as the same has been and may
be amended, supplemented, extended, renewed or otherwise modified from time to
time, the “VLL5 Loan Agreement”), between Oculus Innovative Sciences, Inc., a
Delaware corporation (“Borrower”), and Venture Lending & Leasing V, Inc., as
lender (“VLL5”), and (ii) that certain Loan and Security Agreement and
Supplement thereto, both dated as of June 29, 2011 (as the same has been and may
be amended, supplemented, extended, renewed or otherwise modified from time to
time, the “VLL6 Loan Agreement” and sometimes referred to herein individually
with the VLL5 Loan Agreement, as a “Loan Agreement” and together, as the “Loan
Agreements”), between Borrower and Venture Lending & Leasing VI, Inc., as lender
(“VLL6” and sometimes referred to herein individually with the VLL5, as a
“Lender” and together, as “Lenders”). Except where the context otherwise
requires, or unless this letter (this “Agreement”) otherwise provides, all words
and expressions defined in the Loan Agreements when used or referred to in this
Agreement shall have the same meanings as those provided for in the Loan
Agreements. For the purposes of clarity, the definition of “Collateral” shall
have the meaning as set forth in the waiver agreement (the “Waiver”) made by and
between the Lenders and the Borrower on August 10, 2012.

 

Initial Underwritten Public Offering of Ruthigen, Inc.

 

Borrower has notified Lenders that Borrower’s wholly owned subsidiary, Ruthigen,
Inc., a Delaware corporation (“Ruthigen”), desires to consummate an initial
underwritten public offering of Ruthigen’s equity interests (the “Ruthigen
Shares”) pursuant to a registration statement on Form S-1 filed with the
Securities and Exchange Commission under the federal Securities Act of 1933, as
amended (the “IPO”). All Ruthigen Shares issued on or after the date hereof to
parties other than Borrower are hereinafter referred to as the “Applicable
Ruthigen Shares.” To the extent that the Applicable Ruthigen Shares constitute
Collateral for the Obligations under the Loan Agreements and the other Loan
Documents, it is a condition precedent to the IPO that the Applicable Ruthigen
Shares be free and clear of Lenders’ Liens thereon in order to consummate the
IPO.

 

In order to facilitate the IPO, Borrower wishes to obtain the release of all
Lenders’ Liens on the Applicable Ruthigen Shares that Borrower granted to
Lenders pursuant to the Loan Agreements, if any. Subject to the final sentence
of this paragraph, each Lender hereby releases and discharges all Liens which it
has or has had in any or all of the Applicable Ruthigen Shares pursuant to the
provisions of the Loan Agreements, including without limitation Section 2.10(a).
Each Lender agrees to execute and deliver (and authorize the execution and
delivery of), prior to the pricing of the IPO and from time to time thereafter,
all UCC financing statement amendments and other documents and instruments, in
form and substance reasonably satisfactory to Borrower (collectively, the
“Release Documentation”), and to take all other action as Borrower may from time
to time reasonably request, to release and discharge any Liens that such Lender
may have had or may have in any of the Applicable Ruthigen Shares; provided,
however, that any and all such Release Documentation and such other documents
related thereto and prepared in connection with the transactions contemplated by
this Agreement shall be prepared, filed and recorded at Borrower’s sole cost and
expense. Nothing in this Agreement shall be deemed to be a release of Lenders’
Liens on the Collateral, as defined in the Loan Agreements and amended by the
Waiver, other than the Applicable Ruthigen Shares which are hereby included as
an additional exclusion from the definition of “Collateral” in the Loan
Agreements as amended by the Waiver, including, without limitation, (A) any
Ruthigen Shares owned by Borrower that are not included in the IPO and (B) any
Ruthigen Shares Borrower subsequently acquires after the IPO. This Agreement
shall become effective upon execution by Lenders and Borrower.

 

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Waiver of Issuance of Applicable Ruthigen Shares

 

Lenders hereby waive Section 6.14(b) with respect to the issuance of the
Applicable Ruthigen Shares on or after the date hereof.

 

Consent for Exclusive License of Certain Intellectual Property to Ruthigen, Inc.

 

Borrower has also entered into a license and supply agreement with Ruthigen (the
“License Agreement”), which will become effective upon the closing of the
transaction contemplated by subsection (i) of the definition of IPO. Pursuant to
the License Agreement, Borrower has agreed to exclusively license certain of its
proprietary technology to Ruthigen to enable Ruthigen’s research and development
and commercialization of the newly discovered RUT58-60, and any improvements to
it, in the United States, Canada, European Union and Japan (the “Territory”) for
certain invasive procedures in human treatment as defined in the License
Agreement.

 

As part of its condition to undertake its agreements to make certain advances of
money and to extend certain financial accommodations to Borrower, the Lenders
required the execution of Intellectual Property Security Agreements by and
between Borrower and each respective Lender, each dated June 29, 2011 (the “IP
Agreements”), whereby Borrower granted to the Lenders a security interest in
substantially all of Borrower’s intellectual property whether presently existing
or hereafter acquired. By the terms of the IP Agreements, the VLL5 Loan
Agreement, and the VLL6 Loan Agreement, Borrower is prohibited from entering
into agreement to exclusively license or sell its intellectual property. In
order to allow Borrower to pursue such exclusive licensing of certain of its
intellectual property to Ruthigen, the Lenders are willing to waive such
covenants in consideration of Borrower’s continued commitment to pay off the
indebtedness outstanding under the VLL5 Loan Agreement and under the VLL6 Loan
Agreement in a timely manner. Each Lender has agreed to waive the provisions of
Section 6.5 (Sale of Assets) of each respective Loan Agreement solely as to
Borrower’s anticipated entry into the License Agreement with Ruthigen, whereby
Borrower intends to exclusively license certain of its proprietary technology to
Ruthigen to enable Ruthigen’s research and development and commercialization of
the newly discovered RUT58-60, and any improvements to it, in the Territory for
certain invasive procedures in human treatment.

 

Therefore, pursuant to this Agreement, the following sentence shall be added to
the end of the definition of “Collateral” of the Loan Agreements, as amended by
the Waiver, as an additional exclusion from the definition of “Collateral”:

“and (viii) upon the closing date of the proposed initial underwritten public
offering of Ruthigen, Inc., if any should occur, exclusive license of certain of
Borrower’s proprietary technology to Ruthigen to enable Ruthigen’s research and
development and commercialization of the newly discovered RUT58-60, and any
improvements to it, in the United States, Canada, European Union and Japan for
certain invasive procedures in human treatment pursuant to the License and
Supply Agreement between Borrower and Ruthigen, Inc., dated May 23, 2013, and as
such may be subsequently amended.”

 

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Therefore, pursuant to this Agreement, the following sentence shall be added to
the end of the definition of “Collateral” in the last paragraph of Section 1 of
the IP Agreements, as amended by the Waiver, as an additional exclusion from the
definition of “Collateral”:

“and (x) upon the closing date of the proposed initial underwritten public
offering of Ruthigen, Inc., if any should occur, exclusive license of certain of
Grantor’s proprietary technology to Ruthigen to enable Ruthigen’s research and
development and commercialization of the newly discovered RUT58-60, and any
improvements to it, in the United States, Canada, European Union and Japan for
certain invasive procedures in human treatment pursuant to the License and
Supply Agreement between Grantor and Ruthigen, Inc., dated May 23, 2013, and as
such may be subsequently amended.”

 

General Provisions

 

This Agreement shall become effective upon execution by Lenders and Borrower.
For avoidance of doubt, each Lender hereby consents to the Transfer (as defined
in Section 6.5 of the applicable Loan Agreement) of the Applicable Ruthigen
Shares on the terms and conditions set forth herein. Except as specifically
amended by this Agreement, the Loan Agreements and the other Loan Documents and
Security Documents shall remain in full force and effect and are hereby ratified
and confirmed. The execution, delivery and performance of this Agreement shall
not, except as expressly provided herein, constitute a waiver of any provision
of the Loan Agreements or any of the other Loan Documents or Security Documents.
Without limiting the generality of the provisions of Section 9.3 of the Loan
Agreements, the consent set forth above shall be limited precisely as written
solely for the purpose of permitting Borrower to Transfer the Applicable
Ruthigen Shares and for the purposes of permitting Borrower to consummate the
transactions contemplated by the License Agreement without violating the
provisions of the Loan Agreements, including without limitation Sections 6.5,
6.14, 7.1(h) or 7.1(i) thereof, and this Agreement does not constitute, nor
should it be construed as, a waiver of compliance by Borrower with respect to
(i) Sections 6.5, 6.14, 7.1(h) and 7.1(i) of the Loan Agreements in any other
instance or (ii) any other term, provision or condition of the Loan Agreements
or any other instrument or agreement referred to therein.

 

This Agreement may be executed in any number of counterparts, including
counterparts transmitted by facsimile or electronic transmission, each of which
shall be an original, but all of which together shall constitute one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Agreement is the only
agreement between the parties with respect to its subject matter, and there are
no other agreements, understandings, representations or understandings other
than those expressly stated in this Agreement. Borrower shall pay all costs and
expenses in connection with the transactions contemplated by this Agreement, and
the negotiation and documentation hereof. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA.

 

[Remainder of page intentionally left blank; signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.

 

LENDERS:

 

VENTURE LENDING & LEASING V, INC.

 

By:________________________________

Name:______________________________

Title:_______________________________

 

 

VENTURE LENDING & LEASING VI, INC.

 

By:________________________________

Name:______________________________

Title:_______________________________

 

 

BORROWER:

 

OCULUS INNOVATIVE SCIENCES, INC.

 

By:________________________________

Name:______________________________

Title:_______________________________

 

 

 

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