Unassociated Document


    Exhibit 10.2

       

    EXCLUSIVE
CO-PROMOTION AGREEMENT

    


    This Exclusive Co-Promotion Agreement
(the "Agreement"), is entered into
effective as of February 14, 2011 (the "Effective Date"), by and between QUINNOVA PHARMACEUTICALS, INC., a Delaware corporation,
having an address of 411 South State Street, Third Floor, Newton, Pennsylvania
18940 ("QUINNOVA"), and OCULUS INNOVATIVE SCIENCES, INC., a
Delaware corporation, having an address of 1129 North McDowell Boulevard,
Petaluma, California 94954 ("OCULUS").

    


    AGREEMENT

    


    In
consideration of the foregoing premises, and the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

    


    1.           Definitions

     

    As used
in this Agreement, the following definitions shall apply:

     

    1.1           An
"Affiliate" of a person
or entity means any individual, sole proprietorship, firm, partnership,
corporation, trust, joint venture or other entity, whether de jure or de facto, which, directly or
indirectly, controls, is controlled by or is under common control with such
person or entity.  As used in this definition, “control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the policies and management of a person or entity, whether by the
ownership of stock, by contract or otherwise.

     

    1.2           "Promote" or "Promotion" means
the Promotion of the Product(s) through Quinnova’s sales forces in the
Territory.

     

    1.3           "Detail" (or "Details" and "Detailing") shall mean the activity
ordinarily and customarily undertaken by a sales representative during a
face-to-face sales call on Target Professionals with prescribing authority to
provide information on the use, safety, effectiveness, contraindications, side
effects, warnings and other relevant characteristics of the Product, in a fair
and balanced manner consistent with the requirements of the Good, Drug and
Cosmetic Act, as amended, including, but not limited to, the regulations of 21
CFR Part 202, and using, as necessary or desirable, Promotional
Materials.

     

    1.4           "FDA" shall mean the United
States Food and Drug Administration or any successor entity.

     

    1.5           “Field” means the marketing
and promotion of the Products for chronic wound care sold to podiatrists in the
Territory.

     

    1.6           "GAAP" means generally accepted
accounting principles in the United States.

     

    1.7           "Gross Sales" means the total
amount of revenue recognized for the Products on a GAAP basis by
Oculus.  It is calculated by multiplying the number of units sold
times the price per unit..

     

    1.8           "Marketing Plan" shall have
the meaning provided in Section 2.4(b) hereof.

     

    
      
        
        

      

      
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    1.9           "Net Sales" shall mean Gross Sales
less:

     

    (i)            
rebates;

    


    
      (ii)           
discounts;

    

    


    
      (iii)           allowances
including bad debts;

    

    


    (iv)           wholesale
distributor charges; and

    


    (v)           cost
of goods sold for samples in excess of the mutally agreed sampling plan further
described in Section 3(b).

     

    Net Sales
shall be determined in accordance with Oculus’ standard accounting methods and
GAAP.

     

    1.10           “Products”  shall
means the prescription Products set forth on Exhibit A as same may be amended
for time to time.

     

    1.
11           "Product Labeling" shall mean
the FDA’s approved language specific to a Product’s use.

     

    1.12           "Promotion" means those
activities, including without limitation, provision of marketing materials,
recommendations, congresses, opinion leader management, physicians meetings,
professional education, detailing, advertising and distributing samples of
Products normally undertaken by a pharmaceutical company’s sales force to
implement marketing plans and strategies aimed at encouraging the appropriate
use of a product.  When used as a verb, “Promote” shall mean to engage
in Promotion.

     

    1.13           "Promotional Materials" shall mean all Product
information, resources and education items used or intended for use by the Sales
Force in connection with any Detailing of the Products hereunder, but excluding
the Product Labeling.

     

    1.14           "Oculus Trademarks" shall mean
all trademarks, trade names, brand names, logos and designs, whether registered
or not, used during the Term in connection with the identification, promotion,
marketing or sale of the Products.

     

    1.15           "Regulatory Approvals" shall
mean any approvals (including, but not limited to, the 510(k) approval, labeling
approvals), product, and/or establishment licenses, registrations or
authorizations of any federal, state or local regulatory agency, department,
bureau or other governmental entity, which are necessary for the commercial
manufacture, use, storage, importation, transport, Promotion or sale of a
Product in the United States.

     

    1.16           "Sales Force" shall mean the Quinnova
sales force involved in the detail of the Products.

     

    1.17           “Target List” means the
list of customers identified by Quinnova as their customers, which is agreed to
by Oculus.

     

    1.18           “Target
Professionals” shall mean a podiatrist who is legally authorized to
prescribe the Products.

     

    1.19           "Term" shall have the meaning
provided in Section 8.1 hereof.

     

    
      
        
        

      

      
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    1.20           "Territory" shall mean the continental
United States, its territories and Canada.

     

    1.21           "Third Party" shall mean any
entity other than Quinnova or Oculus or an Affiliate of either
party.

     

    1.22           "TRx" shall mean total
prescriptions of a Product generated by Target Professionals.

     

    2.           Promotion of
Product.

    


    2.1           Exclusive Grant.
During the Term of this Agreement, and subject to the terms and conditions of
this Agreement, Oculus hereby grants to Quinnova the exclusive right to Detail,
or otherwise Promote, the Products under the Oculus Trademark, in the Field in
the Territory, it being acknowledged and agreed that during the Term, Oculus
shall not grant to any Third Party similar rights to Detail, or otherwise
Promote, the Products in the Field within the Territory.  In order to
maintain the exclusive right to Detail under this Agreement, Quinnova must
attain the Minimum Units to Maintain Exclusivity set forth on Exhibit B for the
applicable Calendar Year.  If Quinnova fails to achieve the Minimum
Units to Maintain Exclusivity in any Calendar Year, then Quinnova shall have the
right and option to pay Oculus an amount equal to the net profits Oculus (the
difference in units times average net sales price per unit during the period
times [    ]*%) would have earned on the difference between the
actual number of units sold and the Minimum Units to Maintain Exclusivity (the
"Exclusivity Retention
Payment"); and
upon Quinnova’s payment of the Exclusivity Retention Payment, the exclusive
nature of the Agreement shall continue for an additional Calendar Year. Such
grant to Quinnova does not include the right to assign all or any portion of the
rights and obligations under this Agreement without Oculus’ prior consent, not
to be unreasonably withheld.  Notwithstanding the foregoing Oculus and
Quinnova acknowledge and agree that Advocos shall continue to market and provide
services with respect to the Products in the same manner as heretofore provided
by Advocos.

    


    2.2           Quinnova's
Obligations.

    


    (a)           Quinnova
shall support training and deploy, supervise, motivate (through appropriate and
customary Quinnova incentives), and direct the Quinnova Sales Force to Detail
the Products to the appropriate Targeted Professionals using Promotional
Materials supplied by Oculus in accordance with this Agreement.

    


    (b)           Quinnova
shall be responsible for ensuring that the Detail by the Sales Force of the
Product in the Territory and other conduct of Quinnova and the Sales Force is
consistent with customary pharmaceutical business practices and in compliance
with all applicable laws, rules and regulations.

    


    (c)           None
of Quinnova’s employees or agents will represent or hold themselves as employees
of Oculus at any time.

    


    (d)           Except
as required by law or regulation, any material information mentioning the
Products (i) by name, (ii) by describing the Product, or (iii) via an internet
link to the Product, which Quinnova intends to publish, disclose or otherwise
distribute must be approved in advance by Oculus, which approval may not be
unreasonably withheld.

    


    (e)           Quinnova
shall pay all costs associated with managing the Detail of the Product by its
Sales Force, including without limitation, expenses for reporting of Details,
sample accountability, laptops and other Detail reporting equipment and
salaries, training and compensation.

     

    * Confidential information
redacted and separately filed with the Commission.

     

    
      
        
        

      

      
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    (f)           During
the launch meeting for the Products and any subsequent Quinnova plan of action
meetings, live training and direction for the promotion of the Products shall be
provided to the Sales Force. The launch meeting shall occur prior to the
initiation of the Detailing of the Products by the Sales Force. The launch
meeting shall include training on the Products and coordinating effective
presentation of the Products with any other products in the
Detail.  Quinnova shall provide at least fifteen (15) days notice of
the launch and each plan of action meeting and shall invite representatives of
Oculus to attend.

    


    (g)           Quinnova
shall cause each sales representative in the Sales Force to have completed prior
to his or her deployment both live training on the Product, including training
on FDA regulations and other applicable laws, and “Home Study” (as defined below
in Section 3.3(e)).  Quinnova shall include testing as part of live
training and Home Study. Quinnova shall provide verification of completion of
training and testing on request of Oculus.

    


    (h)           Quinnova’s
Sales Force shall Detail each Product to the appropriate Target Professionals
and rotate, as appropriate, the Products in a First Position Detail or Second
Position Detail during each sales call.

    


    (i)           Quinnova
shall be responsible for ensuring that all samples of the Products will be
stored, managed, and distributed in compliance with all PDMA, FDA, and other
regulations and requirements.  Quinnova shall provide Oculus with a
written report, within thirty (30) days of the end of each calendar quarter
attesting to and demonstrating such compliance.

    


    (j)           Quinnova
shall maintain records of all Details made by its Sales Force for the Products
that will accurately represent the number of Details made for the Product to the
Target List and the number of samples of the Product left with Target
Professionals.  During the Term of this Agreement, Quinnova shall
issue, within thirty (30) days of the end of each calendar quarter, a written
report to Oculus reflecting the number of Details made for the Product to the
Target List and the number of samples of the Product left with Target
Professionals.  Upon Oculus’ request, Quinnova shall provide the
American Medical Association Medical Education number and state license number
of each Target Professional on the Target List.

    


    (k)           Unless
otherwise agreed by Oculus, Quinnova shall use only Promotional Materials
provided by Oculus in accordance with Section 3.3(b).

    


    2.3           Oculus'
Obligations.

    


    (a)           Unless
mutually agreed otherwise in writing, Oculus will develop all Promotional
Materials for the Products. Oculus shall either provide its current Promotional
Materials in camera ready and electronic form to Quinnova, at no cost to
Quinnova, for Quinnova’s reproduction of such materials, or if requested by
Quinnova, sell its current Promotional Materials to Quinnova, at Oculus’ cost,
which for clarity, shall only include Third Party charges, in the quantities
requested.

    


    
      (b)          
Oculus
shall set the pricing of the Products

    

    


    (c)           Oculus
shall promptly provide Promotional Materials and samples, appropriately labeled
as required by law, to Quinnova in accordance with a mutually agreed separate
sampling plan.

    


    (d)           Oculus
shall (at its own cost) provide a trainer and any other pertinent experts for
the launch meeting. To the extent agreed upon by both parties, Oculus shall
provide additional training support; should Quinnova desire personnel and/or
services beyond the above referenced launch meeting, Quinnova  will
pay for fully relevant out-of-pocket costs .

    


    
      
        
        

      

      
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    (e)           Oculus
shall provide home study training materials on the disease state, the Products,
and key competitors ("Home
Study") for the Sales Force.

    


    (f)           To
the extent permitted by applicable law, Oculus shall offer the Products for sale
throughout the Territory and shall ensure that there is a continuous supply of
sufficient quantities of each Product in wholesale distribution so as to fill
promptly all orders for the Products and otherwise fully supply the
market.  Oculus shall be exclusively responsible for accepting and
filling purchase orders, billing, and returns with respect to the
Products.  Oculus shall have the sole responsibility, at its sole cost
and expense, for the shipping, distribution and warehousing, trade relations and
stocking at the retail level, for the invoicing and billing of purchasers of the
Products, for order confirmation in accordance with Oculus’ customary practices,
for the collection of receivables resulting from sale of the Product and for
providing customer support, including handling medical queries.

    


    (g)           Oculus
shall have the sole right and responsibility to handle all recalls and market
withdrawals of the Products.  Oculus shall notify Quinnova as soon as
practicable of (i) any recall or market withdrawal of any lot of a Product, or
(ii) any Warning Letter, Notice of Violation letter, or other communication from
FDA or any other governmental agency related to the marketing, advertising,
promotion, sales or education efforts related to the Products.  Oculus
shall determine in its discretion any response to any communication from FDA or
any other governmental agency related to the Products; provided, however, that
to the extent that any such matter involves or relates to Quinnova sales
representatives or other Quinnova actions, the parties shall cooperate in good
faith to agree on an appropriate response or other course of
action.

    


    2.4           Mutual Obligations of
Quinnova and Oculus.  Each party shall be responsible for the
following during the Term of this Agreement.

    


    (a)           Each
party hereto shall in all material respects conform its practices and procedures
relating to the marketing, Detailing and Promotion of the Products in the United
States to all applicable laws, regulations and guidelines, including, but not
limited to, the Federal Food, Drug and Cosmetic Act, as amended, the
Prescription Drug Marketing Act, as amended, The Medicare and Medicaid Patient
Protection Act of 1987, as amended, 42 U.S.C. §1320a-7b (the "Antikickback Statute"), State
and Federal False Claims acts, the Pharmaceutical Research and Manufacturers of
America ("PhRMA"), Code
on Interactions with Health Care Professionals (the "PhRMA Code"), the Generic
Drug Enforcement Act of 1992 (the "Debarment Act"), and the
American Medical Association ("AMA") Guidelines on Gifts to
Physicians from Industry (the "AMA Guidelines"), as the same
may be amended from time to time, and any regulations with respect to the
accounting of samples of the Products, and shall promptly notify the other party
of and provide the other party with a copy of any correspondence or other
reports with respect to the marketing, Detailing and Promotion of the Product
submitted to or received from the U.S. Department of Health and Human Services
or its components (including the FDA and the Office of the Inspector General),
PhRMA or the AMA relating to such laws, regulations and guidelines.

    


    (b)           
During the Term and for one (1) year after termination or expiration thereof,
each of the parties agrees that it will not, without the other party’s prior
written consent, during the Term knowingly recruit, solicit or induce, directly,
any sales or marketing employee of the other party or any of its Affiliates to
terminate his or her employment and become employed by or consult for the other
party or any of its Affiliate.  For purposes of the foregoing,
“recruit,” “solicit” or “induce” shall not be deemed to mean general
solicitations of employment not specifically targeted at employees of Oculus or
Quinnova, including their respective Affiliates, including responses to general
advertisements.  Notwithstanding the foregoing a party shall be free
to recruit, solicit or induce a sales representative or district manager of the
other party if such other party took action that terminated the employment of
such sales representative or district manager, including, without limitation,
any layoff.

    


    
      
        
        

      

      
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    2.5           Proprietary Rights in the
Product and Promotional Materials.

    


    (a)           Oculus
hereby grants to Quinnova an exclusive right to use the Oculus Trademarks in
connection with Quinnova’s marketing, Promotion and Detailing of the
Products  in the Field in the Territory during the Term. Except for
such exclusive right to market, Promote and Detail the Products as contemplated
in this Agreement, nothing contained herein shall be deemed to grant Quinnova a
license or other right or interest in any patent, trademark, copyright or other
similar property of Oculus.

    


    (b)           Oculus
shall own all right, title and interest in and to the Promotional Materials,
including all copyrights therein, but excluding any rights in or to trademarks
owned by Quinnova and all copyrighted material related to products marketed and
sold by Quinnova other than the Products.  Oculus hereby grants to
Quinnova an exclusive right, during the Term of this Agreement, to use all
Promotional Materials solely in connection with Quinnova’s marketing, Promotion
and Detailing of the Products hereunder.  In no event may Quinnova
develop and use Promotional Materials that are not developed and/or approved by
Oculus in writing in Quinnova’s Promotion of the Products.

    


    2.6           Sales and Distribution;
Recalls.  Oculus shall have the sole right and responsibility
for:

    


    (a)           Manufacturing,
labeling and distributing the Products;

    


    (b)           Booking
sales of the Products hereunder and performance of related services (if Oculus
receives any orders for the Products during the Term of this Agreement, it shall
promptly refer such orders to Oculus;

    


    (c)           Handling
all aspects of order processing, invoicing and collection, inventory and
receivables;

    


    (d)           Providing
customer support, including handling medical queries, and performing other
functions consistent with consumer practice for prescription
pharmaceuticals;

    


    (e)           Responding
to product and medical complaints relating to the Products (Quinnova shall
instruct the Quinnova Sales Forces to direct all medical questions or inquiries
relating to the Products to Oculus);

    


    (f)           Handling
all returns of the Products;

    


    (g)           Handling
all recalls and market withdrawals of the Products.  Quinnova will
make available to Oculus, upon request, all of Quinnova’s pertinent records only
on the Products, which Oculus may reasonably request, to assist it in effecting
any recall or market withdrawals with respect to the Products.  Any
and all reasonable and documented costs and expenses incurred by Quinnova in the
conduct of any such recall or market withdrawal of the Products shall be
reimbursed by Oculus, except to the extent such recall or market withdrawal was
the exclusive result of the failure of Quinnova to comply with its obligations
under this Agreement;

    


    (h)           Communicating
with any governmental agencies and satisfying their requirements regarding
Regulatory Approvals of the Products; provided Quinnova may, but is not
obligated to, communicate directly with a governmental agency, after
notification and consultation with Oculus, which has contacted Quinnova in
connection with is Detailing Activities hereunder;

    


    
      
        
        

      

      
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    (i)           Reporting
adverse reaction reports to U.S. regulatory authorities as required by
applicable U.S. law or regulation; and

    


    (j)           Negotiating
any and all agreements with managed care organizations, payers, wholesalers,
group purchasing organizations, and the like, regarding the
Products.

    


    3.           Compensation
to Quinnova.

    


    3.1           Compensation to
Quinnova.  In consideration of the co-promotion activities
provided by Quinnova hereunder, Oculus shall pay to
Quinnova [      ]* of the collected Net Sales
sold by Quinnova ("Quinnova
Compensation").  The Quinnova Compensation shall be payable
within thirty (30) days after the close of each month during the
Term.  On a quarterly basis, within thirty (30) days after the close
of a calendar quarter, Oculus shall provide Quinnova with a detailed report of
Gross Sales and all amounts deducted by Oculus to arrive at Net Sales for such
quarter.

    


    3.2           Advocos Payment
Offset.  The Quinnova Compensation will be offset
by [      ]* percent of the total
compensation paid to Advocos by Oculus for related activities.

    


    3.3           Method of Payment.
Any payments due to a party under this Agreement shall be made in US dollars by
check or wire transfer to a bank and account designated in writing by such
party.

    


    3.4           Audit
Rights.  Each party to this Agreement shall keep complete, true
and accurate books of account and records reasonably sufficient to determine and
establish the amounts payable pursuant to this Agreement, including
documentation of all costs and expenses incurred or paid in connection with this
Agreement.  All such books and records shall be maintained until the
later to occur of: (a) two (2) years following the relevant calendar year
to which such records pertain; or (b) the expiration of the period required
by applicable laws and regulations.  Not more than once each Contract
Year, each party to this Agreement shall permit the other party to engage an
independent certified public accounting firm reasonably acceptable to the party
to examine, at their own expense, during normal business hours such books and
records for the sole purpose of verifying the accuracy of invoices, expenses,
reports and payments. The auditor shall be required to enter into a
nondisclosure agreement with the party to be audited covering all information
learned or derived during such audit, and shall not be permitted to disclose to
the party requesting the audit any such information other than its determination
of any underpayment by the party subject of the audit.

    


    4.           Trademarks.

    


    4.1           Labeling; Ownership of
Oculus Trademarks. When packaged, all samples of the Products distributed
by Quinnova will bear the Oculus Trademarks and the Product Labeling (if
required) and no other marks or labels unless expressly agreed upon in writing
by Oculus.  In addition, all Promotional Materials shall feature the
applicable Oculus Trademarks.  The ownership and use of the Oculus
Trademarks shall be governed by the following provisions:

    


    (a)           Except
with respect to rights expressly granted under this Agreement, Oculus shall
retain all of its rights and interests in and to the Oculus
Trademarks;

    


    (b)           Quinnova
agrees that in using Oculus Trademarks in its activities under this Agreement,
it will not represent in any way that it has any right or title to the ownership
of the Oculus Trademarks or the registration thereof, and the registration will
remain in the ownership of Oculus or any licensor of any applicable Oculus
Trademark to Oculus.  All use of the Oculus Trademarks pursuant to
this Agreement shall inure to the benefit of Oculus.

     

    * Confidential information
redacted and separately filed with the Commission.


    
      
        
        

      

      
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    5.           Representation and
Warranties.

     

    5.1           Oculus’
Representations.  Oculus hereby represents and warrants the
following to Quinnova:

     

    (a)           Oculus
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation;

     

    (b)           Oculus
has the legal power and authority to enter into and be bound by the terms and
conditions of this Agreement and to perform its obligations under this
Agreement;

     

    (c)           Oculus
has taken all necessary action on its part to authorize the execution and
delivery of this Agreement.  This Agreement has been duly executed and
delivered on behalf of Oculus and constitutes a legal, valid, binding
obligation, enforceable against Oculus in accordance with its
terms.

     

    (d)           Oculus
is not object to any legal, contractual or other restrictions, limitations or
conditions which conflict with its rights and obligations under this Agreement
or which might affect adversely its ability to perform under this
Agreement;

     

    (e)           Oculus
currently has the manufacturing capacity to provide Quinnova with Product(s) in
sufficient quantity to satisfy the first annual forecast;

     

    (f)           To
the best of Oculus’ knowledge, there are no investigations, adverse Third Party
allegations, claims or actions against Oculus, including any proceedings or any
pending or threatened action against Oculus by or before FDA or any other
governmental authority, relating to (1) the Products or (2) Oculus’ Intellectual
Property to the extent that is necessary for the manufacture of the
Products;

     

    (g)           To
the best of Oculus’ knowledge, Oculus has not and will not use, in any capacity
associated with or related to the manufacture of the Products the services of
any persons who have been, or are in the process of being, debarred under the
Generic Drug Enforcement Act of 1992, amending the food, Drug and Cosmetic Act
at 21 U.S.C. §335(a) or any comparable Law.  Neither Oculus nor any of
its officers, employees, or consultants has been convicted of an offense under
(a) either a federal or state law that is cited in 21 U.S.C. §335(a) as a ground
for debarment, denial of approval, or suspension, or (b) any other law cited in
any comparable Regulatory Act as a ground for debarment, denial of approval, or
suspension.

     

    5.2           Quinnova
Representations.  Quinnova hereby represents and warrants the
following to Oculus:

     

    (a)           Quinnova
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation;

     

    (b)           Quinnova
has the legal power and authority to enter into and be bound by the terms and
conditions of this Agreement and to perform its obligations under this
Agreement;

     

    (c)           Quinnova
has taken all necessary action on its part to authorize the execution and
delivery of this Agreement.  This Agreement has been duly executed and
delivered on behalf of Quinnova and constitutes a legal, valid, binding
obligation, enforceable against Quinnova in accordance with its
terms;

     

    
      
        
        

      

      
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    (d)           Quinnova
is not subject to any legal, contractual or other restrictions, limitations or
conditions which conflict with its rights and obligations under this Agreement
or which might affect adversely its ability to perform under this Agreement;
and

     

    (e)           To
the best of Quinnova’s knowledge, Quinnova has not and will not use, in any
capacity associated with or related to the marketing and sale of the Products,
the services of any persons who have been, or are in the process of being,
debarred under the Generic Drug Enforcement Act of 1992, amending the Food, Drug
and Cosmetic Act at 21 U.S.C. §335(a) or any comparable Law.  Neither
Quinnova nor any of its officers, employees, or consultants has been convicted
of an offense under (a) either a federal or state law that is cited in 21 U.S.C.
§335(a) as a ground for debarment, denial of approval, or suspension, or (b) any
other law cited in any comparable Regulatory Act as a ground for debarment,
denial of approval, or suspension.

     

    6.           Indemnification,
Limitation of Liability, Insurance.

     

    6.1.1           Quinnova’s
Indemnity.  Quinnova agrees that it will, at its own expense,
defend all third party suits or proceedings instituted against Oculus arising
out of any off label marketing, sale or use of the Products by
Quinnova.  For purposes of clarity, Quinnova is not liable under this
Section 6.1 for (a) any product liability or other claims related to the actions
of Oculus or (b) any claims covered by Oculus’s indemnity obligations under
Section 6.2.

     

    6.2           Oculus’s Indemnity.
Oculus agrees that it will, at its own expense, defend all third party suits or
proceedings instituted against Quinnova arising out of any on-label use of the
Product in the Field.  For purposes of clarity, Oculus is not liable
for any product liability or other claims related solely to the actions of the
Quinnova or (b) any claims covered by Quinnova’s indemnity obligations under
Section 8.1.

     

    6.3           Procedure.  A
party seeking indemnification under this Section 8 shall provide the
indemnifying party with prompt written notice of any such claim. The
indemnifying party shall have sole control and authority with respect to the
defense and settlement of any such claim. The indemnified party shall cooperate
fully with the indemnifying party, at the indemnifying party’s sole cost and
expense, in the defense of any such claim. The indemnifying party shall not
agree to any settlement of any such claim that does not include a complete
release of the indemnified party from all liability with respect thereto or that
imposes any liability, obligation or restriction on the indemnified party with
the prior written consent of the indemnified party.  The indemnified
party may participate in the defense of any claim through its own counsel, and
at its own expense.

     

    6.4           Consequential Damages
Waiver.  EXCEPT FOR THE INDEMNITY OBLIGATIONS SET FORTH IN THIS
SECTION 6, IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ITS
CUSTOMERS FOR ANY INCIDENTAL, SPECIAL, CONSEQUENTIAL, PUNITIVE OR INDIRECT
DAMAGES, INCLUDING BUT NOT LIMITED TO ANY LOST PROFITS OR LOST SAVINGS ARISING
OUT OF THE USE OR INABILITY TO USE THE PRODUCT OR OTHERWISE ARISING OUT OF OR
RELATED TO THIS AGREEMENT.

     

    6.5           Insurance.  Each
party agrees to maintain (a) workers’ compensation insurance for all of its
employees, the limits of which shall be in statutory compliance with the
applicable compensation laws, and employer’s liability of not less than
$1,000,000 per accident, (b) commercial general liability, including product
liability and automobile insurance with limits of not less than $5,000,000 per
occurrence for bodily injury and property damage for commercial general
liability, including product liability and $1,000,000 per occurrence, combined
single limit for bodily injury and property damage for automobile insurance,
coverage extends to owned, hired, and non-owned vehicles.  If either
party terminates its product liability insurance policy during the term of this
Agreement, it shall obtain and maintain the maximum available Extended Discovery
Period insurance if applicable; each party shall include the other party as
“Additional Insureds” under its product liability insurance policy and shall
further provide, within thirty (30) days of the other party’s request,
Certificates of Insurance verifying insurance limits agreed upon as well as a
thirty (30) day Notice of Cancellation, Non-Renewal or material change
thereto.  All such insurance information shall be kept in confidence
in the same manner as any other confidential information disclosed by one party
to the other.  Neither party’s liability under this Agreement shall be
limited by the amount of insurance that it maintains.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    7           Confidential
Information

     

    7.1           Ownership of Confidential
Information.  Both parties are and shall remain the owner of
its Confidential Information.  Nothing contained in this Agreement
shall be construed as granting any rights by license or otherwise to such
Confidential Information.

     

    7.2           Agreement to Maintain
Confidentiality.  Both parties shall take all reasonable steps
to ensure that it and its agents maintain the confidentiality of the
Confidential Information of the other party.

     

    7.3           Agreement Not to Use or
Disclose.  Except as provided in this Agreement, neither party
shall disclose to any other person or entity Confidential Information of the
disclosing party or use such Confidential Information for any purpose other than
the purposes expressly authorized under this Agreement.

     

    7.4           Specific
Performance.  The parties recognize and agree that any breach
by the receiving party of its obligations contained in this Article VII
would cause irreparable harm to the disclosing party such that the disclosing
party could not be compensated for the harm by money damages
alone.  Therefore, the parties agree that the provisions of this
Article VII shall be enforceable by specific performance, including
injunctive relief.

     

    8           Term and
Termination.

     

    8.1           Term.  This
Agreement shall be effective and in full force from the Effective Date for a
period of five (5) years and shall automatically renew for successive one (1)
year terms, unless terminated earlier pursuant to one hundred twenty (120) days
written notice prior to the end of the then current term.  Should
Quinnova achieve the Minimum Units to Maintain Exclusivity for the Fifth
Calendar Year defined in Exhibit B, Quinnova shall be guaranteed the option to
renew for an additional twelve (12) months at its sole
discretion.  For each year thereafter, the parties shall jointly
determine, in good faith, a new Minimum Units to Maintain Exclusivity for such
renewal period.

     

    8.2           Termination.

     

    (a)           For
Cause.  Either party will have the right to terminate this
Agreement for cause upon sixty (60) days’ prior written notice to the other
party (a) as a result of a material breach of this Agreement by the other party
that remains uncured during such sixty (60) day period, (b) upon the institution
by or against either party of insolvency, receivership or bankruptcy
proceedings or any other proceedings for the settlement of either party's debts,
(c) upon either party making an assignment for the benefit of creditors, (d)
upon either party's dissolution or ceasing to do business, or (e) upon written
notice to the other party pursuant to a termination in accordance with Section
3.5 hereof.

     

    (b)           Termination for Failure to
Meet Minimum Units for Termination per Calendar Year.

     

    (i)           Subject
to Section 8.2(b)(ii), if Quinnova fails to make sales of the Products in an
amount which is equal to or greater than Minimum Units for Termination per
Calendar Year, then Oculus shall have the option of terminating this Agreement
upon thirty (30) days written notice to Quinnova. Oculus right to terminate this
Agreement pursuant to this Section 8.2(b)(i) shall be Oculus’ sole and exclusive
remedy for any failure of Quinnova to achieve the Minimum Units for Termination
during the term of this Agreement.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

     (ii)           Upon
receipt of written termination notice from Oculus, if Quinnova fails to achieve
sales of the Product in any Calendar Year that are equal or greater than the
Minimum Units for Termination per Calendar Year for such Calendar Year, then
Quinnova shall have the right and option to pay to Oculus within sixty (60) days
of the end of such Contract Year an amount equal to the net profits to Oculus
(difference in units times average net sales price per unit during the period
times 30%), which would have been earned on the difference between the actual
number of units sold and the Minimum Units for Termination applicable to
payments for such Calendar Year (“Sales Performance Payment”), and, upon
Quinnova’s payment of the Sales Performance Payment, Oculus shall have no right
to terminate this Agreement pursuant to Section 8.2(b)(ii) for such failure to
achieve the Minimum Units for Termination per Contract Year for such Contract
Year.

    
    

    8.3           Effect of
Termination.

     

    8.3.1           Upon
the termination of this Agreement for any reason, each party shall retain
ownership of its respective Confidential Information and shall return to the
other party all of the Confidential Information received from the other party up
to the time of termination.

     

    8.3.2           Upon
termination of this Agreement, Oculus shall continue to pay Quinnova the
Quinnova Compensation for collected Net Sales received by Oculus after
termination on account of Net Sales made by Oculus prior to the date of
termination.

     

    8.3.3           Except
as provided in Section 8.3.2, neither party shall be liable to the other for
compensation, reimbursement or damages for the loss of prospective profits,
anticipated sales or goodwill as a result of the termination of this
Agreement.

     

    8.3.4           Survival.  Upon
the expiration, or the termination for any reason, of this Agreement, the rights
and obligations of the parties under Section 9.4, and Articles 1 (Definitions),
4 (Trademarks), 6 (Indemnification, Limitation Of Liability, Insurance), 7
(Confidential Information ) and 8.3 (Effect of Termination) shall survive and
remain in effect.

    
    

    9           Miscellaneous.

     

    9.1           Notices.  All
notices shall be deemed given by fax, and addressed as set forth at the
signature line below or to such other address as the party to receive the notice
or request so designates by written notice to the other.

     

    9.2           Assignment and
Subcontracting.  This Agreement and all rights and obligations
hereunder are personal to the parties hereto and shall not be assigned by either
party to any third party without the prior written consent thereto by the other
party. This Agreement shall benefit and be binding upon the parties to this
Agreement and their respective permitted successors and assigns.

     

    9.3           Waiver.  No
term or condition of this Agreement shall be deemed waived unless such waiver is
in a writing executed by the party against whom the waiver is sought to be
enforced.  Failure or delay in the exercise of any right, power or
privilege hereunder shall not operate as a waiver thereof or of any subsequent
failure or delay.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

       

    

    9.4           Governing Law, Jurisdiction,
Venue.  The Agreement will be governed by and construed under
the laws of the State of New York without regard to conflicts of laws
principles.

     

    9.5           Severability.  If
any of the provisions of this Agreement in any way violate or contravene any
laws applicable to this Agreement, such provision shall be deemed not to be a
part of this Agreement and the remainder of this Agreement shall remain in full
force and effect.  In such event, the parties agree to negotiate in
good faith to substitute legal and enforceable provisions that most nearly
effect the original intent of the severed provision.

     

    9.6           Subject
Headings.  The captions and headings used herein are intended
for convenience only, and shall not affect the construction or interpretation of
any section or provision of this Agreement.

     

    9.7           Entire Agreement;
Amendments.  This Agreement, including exhibits attached
hereto, constitutes the entire understanding and agreement of the parties
related to the subject matter hereof, and supersedes any and all prior or
contemporaneous offers, negotiations, agreements and/or understandings, written
or oral, as to such subject matter.  Except as provided herein, no
amendment, revision or modification of this Agreement shall be effective or
binding unless made in writing and signed by the party against whom enforcement
is sought.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    


    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered as of the date transcribed below.

     

    
      	
              OCULUS
      INNOVATIVE SCIENCES, INC.

            	
              QUINNOVA
      PHARAMCEUTICALS, INC.

            
	 	 
	
              BY:
      /s/ Hojabr
      Alimi                          
      

               

              TITLE:
      President,
      CEO                     
      

               

              DATE:
      February 14,
      2011                 

            	
              
                BY:
      /s/ Jeffrey S.
      Day                      
      

                 

                TITLE:
      President,
      CEO                    
      

                 

                DATE:
      February 14,
      2011                
      

              

            
	 	 
	
              ADDRESS:

               

              1129
      No. McDowell Boulevard

              Petaluma,
      CA 94954

               

              PHONE:
      (707) 283-0550

              FAX:
      (707) 283-0551

            	
              ADDRESS:

               

              411
      South State Street

              Newtown,
      Pa. 18940

               

              PHONE:
      (215) 860-6263

              FAX:
      (215) 860-6265

            


    

    


    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    


    Exhibit
A

    Approved
Products

     

    
      	
               
      

            	
              1.

            	
              8
      ounce (236 mL) wound care formulation w/finger
  spray

            


    

     

    
      	
               
      

            	
              2.

            	
              250
      mL wound care formulation with dosing
cap

            


    

     

    
      	
               
      

            	
              3.

            	
              1.5
      ounce (50 grams) wound care
hydrogel

            


    

     

    
      	
               
      

            	
              4.

            	
              3
      ounce (100 grams) wound care
hydrogel

            


    

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    


    Exhibit
B

     

    Minimum
Sales Performance

     

    Minimum Units –
Termination

     

    
      	
              Chronic
      Wound Care in Podiatry

            	
              CY
      20111

            	
              CY
      2012

            	
              CY
      2013

            	
              CY
      2014

            	
              CY
      2015

            
	
              Forecasted
      Target Units

            	
              [     
      ]*

            	
              
                [     
      ]*

              

            	
              
                [     
      ]*

              

            	
              
                [     
      ]*

              

            	
              
                [     
      ]*

              

            
	
              Minimum
      Units to Maintain Exclusivity

               

               %
      of Target Units

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            
	
              Minimum
      Units for Termination

               

              %
      of Target Units

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            	
              
                [     
      ]*

                 

              

              
                [     
      ]*%

              

            
	 
      	 
      	 
      	 
      	 
      	 
      


    

     

    1 For CY 2011 – the
amounts shall be prorated for the period commencing on the launch date of the
Products.

     

    * Confidential information redacted and separately filed with the
Commission.

     

    
      
        
        

      

      
        15