Exhibit
10.3

     

    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION THEREOF,
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD
OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
DUE TO AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.

     

    Date of
Issuance: May 1, 2010

    


    WARRANT
TO PURCHASE

    


    SHARES OF
COMMON STOCK OF

    


    OCULUS
INNOVATIVE SCIENCES, INC.

    


    (Void
after November 30, 2017)

    _______________________________________________

    


    This certifies that VENTURE LENDING
& LEASING V, LLC, a Delaware limited liability company, or assigns (the
“Holder”), for
value received, is entitled to purchase from OCULUS INNOVATIVE SCIENCES, INC., a
Delaware corporation (the “Company”), the
Applicable Number (hereinafter defined) of fully paid and nonassessable shares
of Company’s common stock (the “Shares”), for cash,
at a purchase price per share (the “Stock Purchase
Price”) equal to $2.00. Holder may also exercise this Warrant on a
cashless or “net issuance” basis as described in Section 1(b) below, and this
Warrant shall be deemed to have been exercised in full on such basis on the
Expiration Date (hereinafter defined), to the extent not fully exercised prior
to such date.  The Stock Purchase Price and the number of shares
purchasable hereunder are subject to further adjustment as provided in Section 4
of this Warrant.  This Warrant is issued in connection with the Loan
and Security Agreement of even date herewith (as amended, restated and
supplemented from time to time, the “Loan Agreement”),
between Company, as borrower, and Venture Lending & Leasing V, Inc., a
subsidiary of Holder, as lender (“Lender”).  Capitalized terms used
herein and not otherwise defined in this Warrant shall have the meaning(s)
ascribed to them in the Loan Agreement, unless the context would otherwise
require.  The “Applicable Number” of
shares purchasable hereunder shall be the number obtained by dividing (X) the
sum of (i) $333,334, plus (ii) if the Company satisfies the Second Tranche
Milestone, $166,666, by (Y) the Stock Purchase Price.  If in any case
such number includes a fraction, the fraction shall be adjusted to the closest
integral number.  

     

    This Warrant may be exercised at any
time or from time to time up to and including 5:00 p.m.  (Pacific
time) on November 30, 2017 (the “Expiration Date”),
upon surrender to the Company at its principal office at 1129 North McDowell
Blvd., Petaluma, California 94954 (or at such other location as the Company may
advise Holder in writing) of this Warrant properly endorsed with the Form of
Subscription attached hereto duly filled in and signed and upon payment in cash
or by check of the aggregate Stock Purchase Price for the number of shares for
which this Warrant is being exercised determined in accordance with the
provisions hereof.

     

    This Warrant is subject to the
following terms and conditions:

     

    
      1.          
Exercise; Issuance of
Certificates; Payment for Shares.

    

    


    (a)          Unless
an election is made pursuant to clause (b) of this Section 1, this Warrant shall
be exercisable at the option of the Holder, at any time or from time to time, on
or before the Expiration Date for all or any portion of the Shares (but not for
a fraction of a Share) which may be purchased hereunder for the Stock Purchase
Price multiplied by the number of Shares to be purchased.  The Company
agrees that the Shares purchased under this Warrant shall be and are deemed to
be issued to the Holder hereof as the record owner of such Shares as of the
close of business on the date on which the Form of Subscription attached hereto
shall have been delivered and payment made for such Shares. Subject to the
provisions of Section 2, certificates for the Shares so purchased, together with
any other securities or property to which the Holder hereof is entitled upon
such exercise, shall be delivered to the Holder hereof by the Company at the
Company’s expense within a reasonable time after the rights represented by this
Warrant have been so exercised.  Except as provided in clause (b) of
this Section 1, in case of a purchase of less than all the Shares which may be
purchased under this Warrant, the Company shall cancel this Warrant and execute
and deliver a new Warrant or Warrants of like tenor for the balance of the
Shares purchasable under this Warrant surrendered upon such purchase to the
Holder hereof within a reasonable time.  Each warrant so delivered
shall be in such denominations as may be requested by the Holder hereof and
shall be registered in the name of such Holder or such other name as shall be
designated by such Holder, subject to the limitations contained in Section
2.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    


    (b)          The
Holder, in lieu of exercising this Warrant by the cash payment of the Stock
Purchase Price pursuant to clause (a) of this Section 1, may elect, at any time
on or before the Expiration Date, to surrender this Warrant and receive that
number of  Shares computed using the following formula:

    


    

     

    
      
      

    

    
      
        	
                Where:

              	

                X

              	

                =

              	

                the
      number of Shares to be issued to
Holder.

              


      

    

     

    
      	
               
      

            	
              Y

            	
              =

            	
              the
      number of Shares that Holder would otherwise have been entitled to
      purchase hereunder pursuant to Section 1(a) (or such lesser number of
      Shares as Holder may designate in the case of a partial exercise of this
      Warrant).

            


    

     

    
      	
               
      

            	
              A

            	
              =

            	
              the
      Per Share Price (as defined in Section 1(c) below) of one (1) Share at the
      time the net issuance election under this Section 1(b) is
      made.

            


    

     

    
      	
               
      

            	
              B

            	
              =

            	
              the
      Stock Purchase Price then in
effect.

            


    

     

    Election
to exercise under this Section 1(b) may be made by delivering a signed form of
subscription to Company via facsimile, to be followed by delivery of this
Warrant.  Notwithstanding anything to the contrary contained in this
Warrant, if as of the close of business on the last business day preceding the
Expiration Date this Warrant remains unexercised as to all or a portion of the
Shares purchasable hereunder, then effective as of 9:00 a.m.  (Pacific
time) on the Expiration Date, Holder shall be deemed, automatically and without
need for notice to the Company, to have elected to exercise this Warrant in full
pursuant to the provisions of this Section 1(b), and upon surrender of this
Warrant shall be entitled to receive that number of Shares computed using the
above formula, provided that the application of such formula as of the
Expiration Date yields a positive number for “X”.

    


    (c)          For
purposes of Section 1(b), “Per Share Price”
means:

     

    (i)           If
Company’s Shares are traded on a securities exchange or actively traded
over-the-counter:

     

    (1)           If
Company’s Shares are traded on a securities exchange, the Per Share Price shall
be deemed to be the closing price of Company’s Shares as quoted on any exchange,
as published in the Western Edition of The Wall Street Journal for the trading
day immediately prior to the date of Holder’s election
hereunder.


    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    


     

    (2)           If
Company’s Shares are actively traded over-the-counter, the Per Share Price shall
be deemed to be the closing bid or sales price, whichever is applicable, of the
Shares for the trading day immediately prior to the date of the Holder’s
election hereunder.

     

    (ii)          If
(i) is not applicable, the Per Share Price shall be determined in good faith by
the Board of Directors of Company based on relevant facts and circumstances at
the time of the net exercise under Section 1(b), including in the case of a
Change of Control (as defined in Section 4.3(a) hereof), the consideration
receivable by the holders of the Shares in such Change of Control and the
liquidation preference (including any declared but unpaid dividends), if any,
then applicable to the Shares.

     

    2.           Limitation on
Transfer.

    


    (a)          This
Warrant and the Shares shall not be transferable except upon the conditions
specified in this Section 2, which conditions are intended to ensure compliance
with the provisions of the Securities Act.  Each holder of this
Warrant or the Shares issuable hereunder will cause any proposed transferee of
the Warrant or Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Section
2.  Notwithstanding the foregoing and any other provision of this
Section 2, Holder may freely transfer all or part of this Warrant or the Shares
issuable upon exercise of this Warrant at any time to any lender transferee of a
portion of the loan commitment of Lender under the Loan Agreement, by giving
Company notice of the portion of the Warrant being transferred setting forth the
name, address and taxpayer identification number of the transferee and
surrendering this warrant to Company for reissuance to the transferees(s) (and
Holder, if applicable).

     

    (b)          Each
certificate representing (i) this Warrant, (ii) the Shares, and (iii) any other
securities issued in respect to the Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of this Section 2 or unless such
securities have been registered under the Securities Act or sold under Rule 144)
be stamped or otherwise imprinted with a legend substantially in the following
form (in addition to any legend required under applicable state securities
laws):

    


    THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION THEREOF,
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES
LAWS.  SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO
THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN EXEMPTION THEREFROM
UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

     

    (c)          The
Holder of this Warrant and each person to whom this Warrant is subsequently
transferred (as permitted hereunder) represents and warrants to the Company (by
acceptance of such transfer) that it will not transfer this Warrant (or
securities issuable upon exercise hereof unless a registration statement under
the Securities Act was in effect with respect to such securities at the time of
issuance thereof) except pursuant to (i) an effective registration statement
under the Securities Act, (ii) Rule 144 under the Securities Act (or any other
rule under the Securities Act exempting the disposition of securities from
registration), or (iii) an opinion of counsel, reasonably satisfactory to
counsel for the Company, that an exemption from such registration is
available.

    


    3.           Shares to be Fully Paid;
Reservation of Shares. The Company covenants and agrees that all Shares
which may be issued upon the exercise of the rights represented by this Warrant
will, upon issuance, be duly authorized, validly issued, fully paid and
nonassessable and free from all preemptive rights of any stockholder and free of
all taxes, liens and charges with respect to the issue thereof.  The
Company further covenants and agrees that during the period within which the
rights represented by this Warrant may be exercised, the Company will at all
times have authorized and reserved, for the purpose of issue or transfer upon
exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of authorized but unissued Shares, or other securities and
property, when and as required to provide for the exercise of the rights
represented by this Warrant.  The Company will take all such action as
may be necessary to assure that such Shares may be issued as provided herein
without violation of any applicable law or regulation, or of any requirements of
any domestic securities exchange upon which the Shares may be
listed.  The Company will not take any action which would result in
any adjustment of the Stock Purchase Price (as defined in Section 4 hereof) (i)
if the total number of Shares issuable after such action upon exercise of all
outstanding warrants, together with all Shares then outstanding and all Shares
then issuable upon exercise of all options and upon the conversion of all
convertible securities then outstanding, would exceed the total number of Shares
then authorized by the Company’s Articles of Incorporation, (ii) if the par
value per Share would exceed the Stock Purchase Price.


    
      
         


      

      
        3

        
          

        

      

      
         


      

    

     

    4.           Adjustment of Stock Purchase
Price and Number of Shares.  The Stock Purchase Price and the
number of shares purchasable upon the exercise of this Warrant shall be subject
to adjustment from time to time upon the occurrence of certain events described
in this Section 4.  Upon each adjustment of the Stock Purchase Price,
the Holder of this Warrant shall thereafter be entitled to purchase, at the
Stock Purchase Price resulting from such adjustment, the number of shares
obtained by multiplying the Stock Purchase Price in effect immediately prior to
such adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment, and dividing the product thereof by the Stock Purchase
Price resulting from such adjustment.

    


    4.1          Subdivision or Combination
of Stock.  Without duplication of any provision in the
Company’s Articles of Incorporation, as amended, in case the Company shall at
any time subdivide its outstanding Shares into a greater number of shares, the
Stock Purchase Price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding Shares shall be
combined into a smaller number of shares, the Stock Purchase Price in effect
immediately prior to such combination shall be proportionately
increased.

    


    4.2          Dividends in Shares, Other
Stock, Property, Reclassification.  If at any time or from time
to time the holders of Shares (or any shares of stock or other securities at the
time receivable upon the exercise of this Warrant) shall have received or become
entitled to receive, without payment therefor,

    


    (a)          Shares,
or any shares of stock or other securities whether or not such securities are at
any time directly or indirectly convertible into or exchangeable for Shares, or
any rights or options to subscribe for, purchase or otherwise acquire any of the
foregoing by way of dividend or other distribution, or

    


    (b)         any
cash paid or payable otherwise than as a cash dividend, or

    


    (c)          Shares
or other or additional stock or other securities or property (including cash) by
way of spin off, split-up, reclassification, combination of shares or similar
corporate rearrangement, (other than Shares issued as a stock split, adjustments
in respect of which shall be covered by the terms of Section 4.1
above),

    


    then and
in each such case, the Holder hereof shall, upon the exercise of this Warrant,
be entitled to receive, in addition to the number of Shares receivable
thereupon, and without payment of any additional consideration therefore, the
amount of stock and other securities and property (including cash in the cases
referred to in clauses (b) and (c) above) which such Holder would hold on the
date of such exercise had it been the holder of record of such Shares as of the
date on which holders of Shares received or became entitled to receive such
shares and/or all other additional stock and other securities and
property.

    


    4.3          Change of
Control.

     

    (a)           In
the event of a Change of Control (as hereinafter defined), this Warrant shall be
automatically exchanged for a number of shares of Company’s securities, such
number of shares being equal to the maximum number of shares issuable pursuant
to the terms hereof (after taking into account all adjustments described herein)
had Holder elected to exercise this Warrant immediately prior to the closing of
such Change of Control and purchased all such shares pursuant to the cash
exercise provision set forth in Section 1(a) hereof (as opposed to the cashless
exercise provision set forth in Section 1(b)).  Company acknowledges and
agrees that Holder shall not be required to make any additional payment (cash or
otherwise) for such shares as further consideration for their issuance pursuant
to the terms of the preceding sentence.  “Change of Control”
shall mean any sale, license, or other disposition of all or substantially all
of the assets of Company, or any reorganization, privatization, consolidation,
or merger of Company where the holders of Company’s securities before the
transaction beneficially own less than 50% of the outstanding voting securities
of the surviving entity after the transaction.  This Warrant shall
terminate upon Holder’s receipt of the number of shares of the Company’s equity
securities described in this Section 4.3(a).


    
      
         


      

      
        4

        
          

        

      

      
         


      

    

     

    (b)           Notwithstanding
anything to the contrary set forth in Section 4.3(a), at the first to occur of:
(i) a Change of Control, (ii) the Company’s having closed a round of equity
financing equal to or exceeding $15,000,000 in aggregate additional equity (a
round of equity financing is defined as a transaction or a series of
transactions with substantially the same terms and excludes the exercise or
conversion of any securities outstanding on the day the Warrant is issued), or
(iii) March 31, 2014 (each, a “Put Event”), at
Holder’s option, Holder may elect, within sixty (60) days of such Put Event, to
surrender this Warrant in full to Company in exchange for a cash payment in an
amount equal to the sum of: (x) $500,000 and (y) if the Company satisfies the
Second Tranche Milestone, $250,000.

    


    4.4          Intentionally
Omitted.

    


    4.5          Notice of
Adjustment.  Upon any adjustment of the Stock Purchase Price of
more than 5% of the existing stock purchase price, and/or any increase or
decrease in the number of shares purchasable upon the exercise of this Warrant
the Company shall give written notice thereof, by first class mail, postage
prepaid, addressed to the registered holder of this Warrant at the address of
such holder as shown on the books of the Company.  The notice, which
may be substantially in the form of Exhibit “A” attached hereto, shall be signed
by the Company’s chief financial officer and shall state the Stock Purchase
Price resulting from such adjustment and the increase or decrease, if any, in
the number of shares purchasable at such price upon the exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.

    


    4.6          Other
Notices.  If at any time:

    


    (a)         the
Company shall declare any cash dividend upon its Shares;

    


    (b)         the
Company shall declare any dividend upon its Shares payable in stock or make any
special dividend or other distribution to the holders of its
Shares;

    


    (c)         the
Company shall offer for subscription pro rata to the holders of its Shares any
additional shares of stock of any class or other rights;

    


    (d)         there
shall be any capital reorganization or reclassification of the capital stock of
the Company, or consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another entity;

    


    (e)         there
shall be a voluntary or involuntary dissolution, liquidation or winding-up of
the Company; or

    


    (f)          the
Company shall take or propose to take any other action, notice of which is
actually provided to holders of the Shares;

    


    then, in
any one or more of said cases, the Company shall give, by first class mail,
postage prepaid, addressed to the Holder of this Warrant at the address of such
Holder as shown on the books of the Company, (i) at least 20 day’s prior written
notice of the date on which the books of the Company shall close or a record
shall be taken for such dividend, distribution or subscription rights or for
determining rights to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, or other action and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, or other action, at least 20 day’s written notice of the date when
the same shall take place.  Any notice given in accordance with the
foregoing clause (i) shall also specify, in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Shares
shall be entitled thereto.  Any notice given in accordance with the
foregoing clause (ii) shall also specify the date on which the holders of Shares
shall be entitled to exchange their Shares for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up, or other action as the case may
be.  In addition, the Company shall notify the Holder if the Company
satisfies the Second Tranche Milestone, such notice to be provided as soon as
possible following such satisfaction.


    
      
         


      

      
        5

        
          

        

      

      
         


      

    

     

    4.7          Certain
Events.  If any change in the outstanding Shares of the Company
or any other event occurs as to which the other provisions of this Section 4 are
not strictly applicable and the Board of Directors in good faith believes that
an adjustment is necessary to effect the essential intent and principles with
the adjustment provisions of this Warrant or if the provisions of this Section 4
are strictly applicable to an event but the application of such provisions would
not fairly effect the adjustments to this Warrant in accordance with the
essential intent and principles of such provisions, then the Board of Directors
of the Company shall make in good faith an adjustment in the number and class of
shares issuable under this Warrant, the Stock Purchase Price and/or the
application of such provisions, in accordance with such essential intent and
principles, so as to protect such purchase rights as aforesaid.  The
adjustment shall be such as will give the Holder of this Warrant upon exercise
for the same aggregate Stock Purchase Price the total number, class and kind of
shares as the Holder would have owned had this Warrant been exercised prior to
the event and had the Holder continued to hold such shares until after the event
requiring adjustment.

    


    5.           Issue
Tax.  The issuance of certificates for Shares upon the exercise
of this Warrant shall be made without charge to the Holder of this Warrant for
any issue tax in respect thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any certificate in a name other than
that of the then Holder of this Warrant being exercised.

    


    6.           Closing of
Books.   The Company will at no time close its transfer
books against the transfer of this Warrant or of any Shares issued or issuable
upon the exercise of this Warrant in any manner which interferes with the timely
exercise of this Warrant, unless required by applicable law or regulation, or to
avoid the violation of any applicable law or regulation..

    


    7.           No Voting or Dividend
Rights; Limitation of Liability.  Nothing contained in this
Warrant shall be construed as conferring upon the Holder hereof the right to
vote or to consent as a stockholder in respect of meetings of stockholders for
the election of directors of the Company or any other matters or any rights
whatsoever as a stockholder of the Company.  No dividends or interest
shall be payable or accrued in respect of this Warrant or the interest
represented hereby or the shares purchasable hereunder until, and only to the
extent that, this Warrant shall have been exercised.  No provisions
hereof, in the absence of affirmative action by the Holder to purchase Shares,
and no mere enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of such Holder for the Stock Purchase Price or
as a stockholder of the Company, whether such liability is asserted by the
Company or by its creditors.

    


    
      8.          
Intentionally
Omitted.

    

    


    9.           Registration
Rights.  Holder hereof shall be entitled, with respect to the
Shares issued upon exercise hereof, to all of the registration rights set forth
in Section 8 of the Purchase Agreement dated as of February 6, 2009(as amended,
restated or modified from time to time, the “Purchase Agreement”),
to the same extent and on the same terms and conditions as possessed by the
major institutional investors thereunder.  Company shall take such
action as may be reasonably necessary to assure that the granting of such
registration rights to Holder does not violate the provisions of the Purchase
Agreement or any of Company’s charter documents or rights of prior grantees of
registration rights.  Notwithstanding the foregoing, (a) Holder agrees
that it will have piggyback rights and not demand rights such that it will not
have any right to ask, demand or require that the Company file a registration
statement on its behalf; and (b) Holder agrees to relinquish its piggyback
registration rights in connection with any registration statement with respect
to which the U.S. Securities and Exchange Commission notifies the Company that
the securities proposed to be registered therein exceeds the number of
securities which can be registered in a valid secondary offering under Rule 415
of the Securities Act of 1933, and Holder acknowledges that it may be required
to relinquish all of its rights prior to other selling shareholders
relinquishing their rights.


    
      
         


      

      
        6

        
          

        

      

      
         


      

    

    


    10.         Rights and Obligations
Survive Exercise of Warrant.  The rights and obligations of the
Company, of the Holder of this Warrant and of the holder of Shares issued upon
exercise of this Warrant, contained in Sections 6 and 9 shall survive the
exercise of this Warrant.

     

    11.         Modification and
Waiver.  This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of the same is sought.

     

    12.         Notices.  Any
notice, request or other document required or permitted to be given or delivered
to the Holder hereof or the Company shall be deemed to have been given (i) upon
receipt if delivered personally or by courier (ii) upon confirmation of receipt
if by telecopy or (iii) three business days after deposit in the US mail, with
postage prepaid and certified or registered, to each such Holder at its address
as shown on the books of the Company or to the Company at the address indicated
therefor in the first paragraph of this Warrant.

     

    13.         Survival.  All
of the obligations of the Company relating to the Shares issuable upon the
exercise of this Warrant shall survive the exercise and termination of this
Warrant.  All of the covenants and agreements of the Company shall
inure to the benefit of the successors and assigns of the Holder
hereof.  The Company will, at the time of the exercise of this
Warrant, in whole or in part, upon request of the Holder hereof and at the
Holder’s expense, acknowledge in writing its continuing obligation to the Holder
hereof in respect of any rights (including, without limitation, any right to
registration of the Shares) to which the Holder hereof shall continue to be
entitled after such exercise in accordance with this Warrant; provided, that the
failure of the Holder hereof to make any such request shall not affect the
continuing obligation of the Company to the Holder hereof in respect of such
rights.

    


    14.         Descriptive Headings and
Governing Law.  The descriptive headings of the several
sections and paragraphs of this Warrant are inserted for convenience only and do
not constitute a part of this Warrant.  This Warrant shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of California.

     

    15.         Lost Warrants or Stock
Certificates.  The Company represents and warrants to the
Holder hereof that upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction, or mutilation of any Warrant or stock
certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company at Holder’s expense will make and deliver a new Warrant
or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant or stock certificate.

    


    16.         Fractional
Shares.  No fractional shares shall be issued upon exercise of
this Warrant.  The Company shall, in lieu of issuing any fractional
share, pay the holder entitled to such fraction a sum in cash equal to such
fraction multiplied by the then effective Stock Purchase Price.

     

    17.         Representations of
Holder.  With respect to this Warrant, Holder represents and
warrants to the Company as follows:

    


    17.1        Experience.  It
is an “accredited investor” as that term is defined in Rule 501 (a) promulgated
under the Securities Act of 1933, as amended; is experienced in evaluating and
investing in companies engaged in businesses similar to that of the
Company;  it understands that investment in this Warrant involves
substantial risks; it has made detailed inquiries concerning the Company, its
business and services, its officers and its personnel; the officers of the
Company have made available to Holder any and all written information it has
requested; the officers of the Company have answered to Holder’s satisfaction
all inquiries made by it; in making this investment it has relied upon
information made available to it by the Company; and it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of investment in the Company and it is able to bear the
economic risk of that investment.


    
      
         


      

      
        7

        
          

        

      

      
         


      

    

    


    17.2        Investment.  It
is acquiring this Warrant for investment for its own account and not with a view
to, or for resale in connection with, any distribution thereof.  It
understands that this Warrant and the Shares issuable upon exercise thereof have
not been registered under the Securities Act, nor qualified under applicable
state securities laws.

    


    17.3        Rule
144.  It acknowledges that this Warrant and the Shares must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available.  It has been
advised or is aware of the provisions of Rule 144 promulgated under the
Securities Act.

    


    17.4        Access to
Data.  It has had an opportunity to discuss the Company’s
business, management and financial affairs with the Company’s management and has
had the opportunity to inspect the Company’s facilities.

    


    18.         Additional Representations
and Covenants of the Company.  The Company hereby represents,
warrants and agrees as follows:

     

    18.1        Corporate
Power.  The Company has all requisite corporate power and
corporate authority to issue this Warrant and to carry out and perform its
obligations hereunder.

    


    18.2        Authorization.  All
corporate action on the part of the Company, its directors and stockholders
necessary for the authorization, execution, delivery and performance by the
Company of this has been taken.  This Warrant is a valid and binding
obligation of the Company, enforceable in accordance with its
terms.

    


    18.3        Offering.  Subject
in part to the truth and accuracy of Holder’s representations set forth in
Section 17 hereof, the offer, issuance and sale of this Warrant is, and the
issuance of Shares upon exercise of this Warrant will be exempt from the
registration requirements of the Securities Act, and are exempt from the
qualification requirements of any applicable state securities laws; and neither
the Company nor anyone acting on its behalf will take any action hereafter that
would cause the loss of such exemptions.

     

    18.4        Listing; Stock
Issuance.  The Company shall secure and maintain the listing of
the Shares issuable upon exercise of this Warrant upon each securities exchange
or over-the-counter market upon which the Company’s Shares are  listed
or quoted.  Upon exercise of this Warrant, the Company will use its
best efforts to cause stock certificates representing the Shares purchased
pursuant to the exercise to be issued in the names of Holder, its nominees or
assignees, as appropriate at the time of such exercise.

    


    18.5        Certificate and
By-Laws.  The Company has made available to Holder true and
complete copies of the Company’s Certificate of Incorporation, By-Laws, and each
Certificate of Designation or other charter document setting, forth any rights,
preferences and privileges of Company’s capital stock, each as amended and in
effect on the date of issuance of this Warrant.

    


    18.6        Intentionally
Omitted.

    


    18.7        Financial and Other
Reports.  From time to time up to the earlier of the Expiration
Date or the complete exercise of this Warrant, the Company shall furnish to
Holder (i) upon delivery to the Company’s Board of Directors, an audited balance
sheet and statement of changes in financial position at and as of the end of
such fiscal year, together with an audited statement of income for such fiscal
year; (ii) within 45 days after the close of each fiscal quarter of the Company,
an unaudited balance sheet and statement of cash flows at and as of the end of
such quarter, together with an unaudited statement of income for such quarter
and a capitalization table; and (iii) promptly after sending, making available,
or filing, copies of all reports, proxy statements, and financial statements
that the Company sends or makes available to its stockholders and all
registration statements and reports that the Company files with the SEC or any
other governmental or regulatory authority.  In addition, Company
agrees to provide Holder at any time and from time to time with such information
as Holder may reasonably request for purposes of Holder’s compliance with
regulatory, accounting and reporting requirements applicable to
Holder.  Notwithstanding the foregoing, the Company shall not be
required to furnish to Holder the financial information described in this
Section 18.7 in the event such financial information has been previously
delivered to Lender pursuant to the Loan Agreement.


    
      
         


      

      
        8

        
          

        

      

      
         


      

    

    


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

    


    IN WITNESS WHEREOF, the Company has
caused this Warrant to be duly executed by its officer, thereunto duly
authorized as of the date of issuance set forth on the first page
hereof.

    


    OCULUS
INNOVATIVE SCIENCES, INC

     

    
      
        
          	
                  By:

                	
                  /s/ Robert E. Miller

                
	
                  Name:

                	
                  Robert E. Miller

                
	
                  Title:

                	
                    Chief Financial
    Officer

                


        

      

    

     

    
      
        
          	
                  VENTURE
      LENDING & LEASING V, LLC,

                
	
                  a
      Delaware limited liability company

                
	 
      	 
      	 
      
	
                  By:

                	
                  Westech
      Investment Advisors, Inc.,

                
	 
      	
                  a
      California corporation

                
	
                  Its:

                	
                  Managing
      Member

                
	 
      	 
      	 
      
	 
      	
                  By:

                	
                  /s/ Maurice Werdegar

                
	 
      	
                  Name:

                	
                  Maurice Werdegar

                
	 
      	
                  Title:

                	
                    President and
  CEO

                


        

      

    


    
      
         


      

      
        9

        
          

        

      

      
         


      

    

    


    FORM OF
SUBSCRIPTION

    


    (To be
signed only upon exercise of Warrant)

    


    To:           OCULUS
INNOVATIVE SCIENCES, INC.

    


    
      	
               ̈

            	
              The
      undersigned, the holder of the within Warrant, hereby irrevocably elects
      to exercise the purchase right represented by such Warrant for, and to
      purchase thereunder, (1) See Below ________________ (_____)shares (the
      “Shares”) of Stock of __________ and herewith makes payment of
      _____________ Dollars ($________) therefor, and requests that the
      certificates for such shares be issued in the name of, and delivered to,
      _________, whose address is
___________.

            


    

     

    
      	
               ̈

            	
              The
      undersigned hereby elects to convert ______ percent (__%) of the value of
      the Warrant pursuant to the provisions of Section 1(b) of the
      Warrant.

            


    

     

    The
undersigned acknowledges that it has reviewed the representations and warranties
contained in Section 17 of this Warrant and by its signature below hereby makes
such representations and warranties to the Company.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  	
                                                          Dated

                                                        	
                                                          ______________________

                                                        	    
      
	
                                                          Holder:

                                                        	
                                                          ______________________

                                                        	    
      
	
                                                          By:

                                                        	
                                                          ______________________

                                                        	    
      
	
                                                          Its:

                                                        	
                                                          ______________________

                                                        	    
      
	 
      	 
      	 
	
                                                          (Address)

                                                        	 
	

                                                          ___________________________

                                                        	    
      
	

                                                          ___________________________

                                                        	    
      


                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    
      	
              (1)

            	
              Insert
      here the number of shares called for on the face of the Warrant (or, in
      the case of a partial exercise, the portion thereof as to which the
      Warrant is being exercised), in either case without making any adjustment
      for additional Shares or any other stock or other  securities or
      property or cash which, pursuant to the adjustment provisions of the
      Warrant, may be issuable upon
exercise.

            


    


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    ASSIGNMENT

    


    FOR VALUE
RECEIVED, the undersigned, the holder of the within Warrant, hereby sells,
assigns and transfers all of the rights of the undersigned under the within
Warrant, with respect to the number of Shares covered thereby set forth herein
below, unto:

     

    
      
        
          
            
              
                
                  	
                          Name
      of Assignee

                        	 	
                          Address

                        	 	
                          No.
      of Shares

                        
	 
      	 	 
      	 	 
      


                

              

            

          

        

      

    

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  	
                                          Dated

                                        	
                                          ______________________

                                        	     
      
	
                                          Holder:

                                        	
                                          ______________________

                                        	   
      
	
                                          By:

                                        	
                                          ______________________

                                        	   
      
	
                                          Its:

                                        	
                                          ______________________

                                        	    
      


                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
"A"

    


    [On letterhead of the
Company]

    


    


    Reference is hereby made to that
certain Warrant dated May 1, 2010, issued by OCULUS INNOVATIVE SCIENCES, INC, a
Delaware corporation (the "Company"), to VENTURE LENDING & LEASING V, INC.,
a Maryland corporation (the "Holder").

    


    [IF APPLICABLE]  The Warrant
provides that the actual number of shares of the Company's capital stock
issuable upon exercise of the Warrant and the initial exercise price per share
are to be determined by reference to one or more events or conditions subsequent
to the issuance of the Warrant.  Such events or conditions have now
occurred or lapsed, and the Company wishes to confirm the actual number of
shares issuable and the initial exercise price.  The provisions of
this Supplement to Warrant are incorporated into the Warrant by this reference,
and shall control the interpretation and exercise of the Warrant.

    


    [IF APPLICABLE]  Notice is
hereby given pursuant to Section 4.5 of the Warrant that the following
adjustment(s) have been made to the Warrant:  [describe adjustments,
setting forth details regarding method of calculation and facts upon which
calculation is based].

    


    This certifies that the Holder is
entitled to purchase from the Company __________________________ (____________)
fully paid and nonassessable shares of the Company's _________ Stock at a price
of _________________________ Dollars ($__________) per share (the "Stock
Purchase Price").  The Stock Purchase Price and the number of shares
purchasable under the Warrant remain subject to adjustment as provided in
Section 4 of the Warrant.

    


    Executed this ___ day of
________________, 20____.

    


    
      
        
          
            
              
                
                  
                    
                      
                        	
                                OCULUS
      INNOVATIVE SCIENCES, INC

                              	 
	 
      	 
      	 
	
                                By:

                              	 
      	 
	 
      	 
      	 
	
                                Name:

                              	 
      	 
	 
      	 
      	 
	
                                Title: