Document:

exhibit10.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 10.10

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT dated as of February 1, 2008, by and among HIRSCH INTERNATIONAL CORP., a Delaware corporation with offices located at 50 Engineers Road,
Hauppauge, New York 11788 (the "Company") and BEVERLY EICHEL, residing at 95 Fairway View Drive, Commack, New York 11725 (the "Executive").

W I T N E S S E T H:

     WHEREAS, the Company is engaged in importing, marketing, manufacturing, and distributing commercial embroidery equipment and related goods and services; and

     WHEREAS, the Company wishes to assure itself of the services of the Executive for the period provided in this Agreement, and the Executive is willing to continue to serve in the employ of the Company on a full-time basis for said period upon the
terms and conditions hereinafter provided.

     NOW, THEREFORE, the Company and the Executive, intending to be legally bound, agree as follows:

     1. Employment. The
Company, pursuant to the terms and conditions set forth in this Agreement, hereby agrees to continue to employ the Executive, who accepts such continued employment with the Company as its Executive Vice President – Finance and Administration
and Chief Financial Officer and such other positions and duties of a responsible nature as the Company's Board of Directors may from time to time determine and assign to her commensurate with the position of Executive Vice President – Finance
and Administration and Chief Financial Officer. Throughout the Term (as defined herein), the Executive shall devote all of her business time,

attention and energy to her duties and to the business and affairs of the Company and shall not engage, directly or indirectly, in any other business, employment or occupation.

     2. Term. The term of
this Agreement shall commence as of February 1, 2008 (the "Commencement Date") and shall terminate on the date immediately preceding the second anniversary date of the Commencement Date (the "Term").

     3. Compensation. As
full compensation for all services to be rendered by the Executive to the Company pursuant to the terms of this Agreement, the Executive shall receive the compensation and benefits described in this Section 3.

          3.1 Executive shall receive a base salary (the “Base Salary”) at the annual rate of (i) Three Hundred Thousand ($300,000.00) Dollars during the
first year of the Term, and (ii) Three Hundred Fifteen Thousand ($315,000.00) Dollars during the second year of the Term. The Base Salary shall be payable at such regular times and intervals as the Company customarily pays its employees from
time to time.

          3.2 The Executive shall have the right to participate, on the same basis as other executive employees of the Company, in the Company's employee benefit
programs, if any, including, without limitation, group life, health, accident and hospitalization insurance programs covering the Executive and dependents.

          3.3 The Executive shall be entitled to participate in and receive a bonus under the Company's Annual Incentive Plan for Key Executive Officers, (the “Bonus
Plan”) as that plan shall be adopted and implemented by the Compensation Committee of the Board of Directors from time to time, substantially as described in Appendix A hereto. The Executive’s Target Incentive Percentage and Stretch
Incentive Percentage under the Bonus Plan shall be 35 percent and 70 percent, respectively, of Base Compensation. All such bonuses shall become due and payable on the last day of the Company’s fiscal year with respect to which the bonus was
computed.

          3.4 The Company shall deduct from the Executive's Base Compensation and any bonus payment which Executive may receive any federal, state or city withholding
taxes, social security contributions and any other amounts which may be required to be deducted or withheld by the Company pursuant to any federal, state or city laws, rules or regulations.

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          3.5 The Company shall reimburse the Executive, or cause her to be reimbursed, for all reasonable out-of-pocket expenses incurred by her in the performance of
her duties hereunder or in furtherance of the business and/or interests of the Company; provided, however, that the Executive shall have previously furnished to the Company an itemized account, satisfactory to the Company, in substantiation of such
expenditures.

          3.6 During the Term of this Agreement the Company will reimburse Executive for her actual automobile lease or ownership expenses, not to exceed $750 per
month, plus actual expenses incurred in operating the automobile that has been designated by Executive as her vehicle for use in Company business.

          3.7 During the Term, Executive shall be entitled to four (4) weeks paid vacation per year to be taken in accordance with Company policy and
procedure.

     4. Indemnification.
The Company undertakes, to the maximum extent permitted by law, to defend, indemnify and hold the Executive harmless from and against all claims, damages, losses and expenses, including reasonable attorneys' fees and disbursements, arising out of
the performance by the Executive of her duties pursuant to this Agreement, in furtherance of the Company's business and within the scope of her employment.

     5. Termination.

          5.1 Death. If the
Executive dies during the Term, she shall be entitled to receive her Base Salary through the end of the month during which death occurs plus a pro rata portion, based upon her period of service to the Company, of the amount, if any, she would have
been entitled to receive under the Bonus Plan if her employment had continued until the end of the fiscal year.

          5.2 Disability. The
Company may terminate the employment of the Executive by reason of disability by giving notice of such termination as of the end of any month after the Executive becomes disabled. For purposes of this Agreement, the Executive shall be deemed to be
"disabled" if the Executive has been substantially unable to perform her duties for three (3) consecutive months or six (6) months in any nine (9) month period, as determined in good faith by a majority of the members of the Board of Directors
(excluding the Executive), based upon such medical or other evidence as the Board may deem sufficient. In the event of such termination

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for disability, the Executive shall be entitled to receive her Base Salary through the end of the month during which disability occurs plus a pro rata portion, based upon her period of
service to the Company, of the amount, if any, she would have been entitled to receive under the Incentive Plan if her employment had continued until the end of the fiscal year.

          5.3 Involuntary Termination. The Company shall have the right to terminate employment of the Executive for “Cause” if one or more of the following acts shall occur:

     (a) Executive shall have committed a material breach of any of the provisions or covenants of this Agreement;

     (b) Executive shall have committed an act of gross negligence in the performance of her duties or obligations hereunder, or, without proper cause, the willing
refusal or habitual neglect of her employment duties or obligations under this Agreement;

     (c) Executive shall have committed a material act of willful misconduct, dishonesty or breach of trust which directly or shall indirectly cause the Company or
any of its subsidiaries to suffer any loss, fine, civil penalty, judgment, claim, damage or expense; or

     (d) Executive shall have been convicted of, or shall have plead guilty or nolo contendere
to, a felony (unless committed in the reasonable, good faith belief that the Executive's actions were in the best interests of the Company and its stockholders and would not
violate criminal law).

The Company may terminate the employment of Executive for Cause by delivering notice (the "Termination Notice") of such intention to Executive, describing with reasonable detail the events
or the acts or omissions of the Executive constituting the basis for termination, provided, however, with respect to any act or omission set forth in clauses (a) and (b) of this Section 5.3, upon the reasonable request of the Executive such
termination shall not be effective until thirty (30) days following the Termination Notice, during which time the Executive shall have an opportunity to cure or remedy such act or omission. If the Company terminates the employment of the executive
for Cause the Executive shall be entitled to receive only her Base Salary through the end of the month in which the Termination Notice is effective.

          5.4 Severance Payments. In addition to the amounts described above in this Section 5, if termination of employment shall occur as a result of one of the following listed

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events, the Company shall pay the Executive severance payments (“Severance Payments”), in the amounts described below:

     (a) this Agreement is terminated prior to the expiration of its Term due to Executive’s death or disability as set forth in Sections 5.1 and 5.2,
respectively, above;

     (b) the Company commits a material breach of the provisions of this Agreement and fails to cure or remedy such breach within thirty (30) days following its
receipt of written notice thereof given by the Executive (at the end of which time this Agreement shall be deemed terminated); or

     (c) prior to or concurrent with the expiration of the Term, the Company fails to offer Executive employment with the Company as its Executive Vice
President-Finance and Administration and Chief Financial Officer on substantially the same terms and conditions as are set forth in this Agreement.

The Severance Payments shall be computed and payable as follows:

     (w) the Executive shall continue to receive regular payments of Base Salary for a period of six (6) months following termination (the “Severance Payment
Period”), as if termination had not occurred; and

     (x) following the close of the fiscal year in which termination occurs, provided Executive has not violated the provisions of Sections 6 and 7, the Company
shall pay to Executive a pro rata portion, based upon her period of service to the Company, of the amount, if any, she would have been entitled to receive under the Bonus Plan if her employment had continued until the end of the fiscal year;
provided, however, that

     (y) the Company may suspend or terminate the Severance Payments if Executive should be in default of her obligations set forth in Sections 6.1 and 6.2
below.

During the Severance Payment Period the Executive shall have the right to continue to participate in the Company’s health, accident and hospitalization insurance programs covering the
Executive and her dependents upon the terms and conditions which are then applicable to the Company’s executive officers generally.

          5.5 Resignation by Executive. Notwithstanding anything contained herein to the contrary, Executive shall have the right to terminate this Agreement at any time, for

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any reason and for no reason, upon thirty (30) days prior written notice to the Company. Upon such termination, the Company shall pay to Executive the Base Salary earned by Executive through
the date of termination. Thereafter, with the specific exception of the obligations set forth in Sections 6 and 7 below, neither Executive nor the Company shall have any further obligations hereunder; provided, however, that following the close of
the fiscal year in which termination occurs, if Executive has not violated the provisions of Sections 6 and 7, the Company shall pay to Executive a pro rata portion, based upon her period of service to the Company, of the amount, if any, she would
have been entitled to receive under the Incentive Plan if her employment had continued until the end of the fiscal year.

     6. Restrictive Covenants.

          6.1 Confidential Information; Covenant not to Disclose. The Executive covenants and undertakes that she will not at any time during or after the termination of her employment hereunder reveal, divulge, or make known to any person, firm, corporation,
or business organization (other than the Company or its affiliates, if any), or use for her own account any customer lists, trade secrets, or any secret or any confidential information of any kind used by the Company during her employment by the
Company, and made known (whether or not with the knowledge and permission of the Company, whether or not developed, devised, or otherwise created in whole or in part by the efforts of the Executive, and whether or not a matter of public knowledge
unless as a result of authorized disclosure) to the Executive by reason of her employment by the Company. The Executive further covenants and agrees that she shall retain such knowledge and information which she has acquired or shall acquire and
develop during her employment respecting such customer lists, trade secrets, and secret or confidential information in trust for the sole benefit of the Company, its successors and assigns.

          6.2 Covenant Not to Compete; Non-Interference.

          6.2.1 The Executive covenants and undertakes that, during the period of her employment hereunder and for a period of one (1) year thereafter, she will not,
without the prior written consent of the Company, directly or indirectly, and whether as principal, agent, officer, director, employee, consultant, or otherwise, alone or in association with any other person, firm, corporation, or other business
organization, carry on, or be engaged, concerned, or take part in, or render services to, or own, share in the earnings of, or invest in the stock, bonds, or other securities

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of any person, firm, corporation, or other business organization (other than the Company or its affiliates, if any) engaged in the business of distributing, manufacturing or assembling
embroidery equipment or software for the embroidery industry or providing retail embroidery services (a "Similar Business") except in the course of her employment hereunder; provided, however, that the Executive may invest in stock, bonds, or other
securities of any Similar Business (but without otherwise participating in the activities of such Similar Business) if (i) such stock, bonds, or other securities are listed on any national or regional securities exchange or have been registered
under Section 12(g) of the Securities Exchange Act of 1934; and (ii) her investment does not exceed, in the case of any class of the capital stock of any one issuer, 2% of the issued and outstanding shares, or in the case of bonds or other
securities, 2% of the aggregate principal amount thereof issued and outstanding.

          6.2.2 The Executive covenants and undertakes that during the period of her employment hereunder and for a period of one (1) year thereafter she will not,
whether for her own account or for the account of any other person, firm, corporation or other business organization, interfere with the Company's relationship with, or endeavor to entice away from the Company, any person, firm, corporation or other
business organization who or which at any time during the term of the Executive's employment with the Company was an employee, consultant, agent, supplier or customer of the Company.

          6.2.3 If any provision of this Article 6.2 is held by any court of competent jurisdiction to be unenforceable because of the scope, duration or area of
applicability, such provision shall be deemed modified to the extent the court modifies the scope, duration or area of applicability of such provision to make it enforceable.

     7. Injunction. It is
recognized and hereby acknowledged by the Executive that a breach or violation by the Executive of any of the covenants or agreements contained in this Agreement may cause irreparable harm and damage to the Company hereto, the monetary amount of
which may be virtually impossible to ascertain. As a result, the Executive recognizes and acknowledges that the Company shall be entitled to an injunction, without posting any bond or security in connection therewith, from any court of competent
jurisdiction enjoining and restraining any breach or violation of any of the restrictive covenants contained in Article 6 of this Agreement by the Executive , either directly or indirectly, and that such right to injunction shall be
cumulative

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and in addition to whatever other rights or remedies the Company may possess. Nothing contained in this Article 7 shall be construed to prevent the Company from seeking and recovering from
the Executive damages sustained as a result of any breach or violation by the Executive of any of the covenants or agreements contained in this Agreement, and that in the event of any such breach, the Company shall avail itself of all remedies
available both at law and at equity.

     8. Compliance with Other Agreements. The Executive represents and warrants to the Company that the execution of this Agreement by her and the performance of her obligations hereunder will not, with or without the giving of notice, the passage of time or both,
conflict with, result in the breach of any provision of or the termination of, or constitute a default under, any agreement to which the Executive is a party or by which the Executive is or may be bound.

     9. Employment Security Provisions.

          9.1 Payments in the Event of Change of Control. If a “Change of Control” should occur during the Term of this Agreement and if, within six (6) months after the Change of Control event occurs, (i) the employment of Executive with the
Company is terminated by the Company for any reason other than those described in Sections 5.1, 5.2 or 5.3, above; or (ii) the Executive terminates her employment with the Company for Good Reason, as defined below, all of the following provisions
shall apply:

          (a) The Company shall pay Executive for a period of one (1) year following the termination of employment (the “Payment Period”), an annual amount
equal to the Executive’s Base Salary. Payments of Base Salary shall be made during the Payment Period in substantially equal monthly or other installments of the same frequency as the payments of salary being made to the Executive at the date
of the Change of Control, and shall commence as soon as practicable after the date of termination of Executive’s employment.

          (b) Executive shall continue to be covered by, and receive any and all benefits accrued or provided under, any health and dental plan, disability plan, survivor
income plan and life insurance plan or other benefit plan maintained by the Company in which Executive was participating immediately prior to the date of termination, as if Executive continued to be an employee of the Company. The amount, form and
time of payment of such benefits shall be determined by the terms of such plans. However, if participation in any one or more of such welfare or benefit plans is not possible under the terms thereof, the Company shall provide the

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Executive with substantially identical benefits. Such coverage shall cease if and when the Executive obtains employment with another employer during the Payment Period, and becomes eligible
for coverage under a substantially similar plan provided by the new employer.

          (c) If upon the date of termination of Executive’s employment, Executive shall hold any stock options under any stock option plan of the Company, as such
plans may be amended and in effect from time to time, all such stock options shall continue to be valid and in full force and effect and shall become immediately vested and exercisable.

          (d) During the Payment Period, Executive shall not be entitled to reimbursement for fringe benefits other than as provided in this Agreement, nor shall
Executive be entitled to receive any payments or other compensation attributable to vacation periods that would have been earned had Executive’s employment continued during the Payment Period.

          9.2 Definitions applicable to Change of Control. The following definitions, in addition to the definitions appearing elsewhere in this Agreement, shall apply to this Article 9:

          (a) “Change of Control” shall be deemed to occur on the happening of any of the following events: (i) a sale of substantially all of the assets of the
Company to an entity that is not controlled by the Company or by any persons or entities that immediately preceding such event owned, directly or indirectly, individually or in combination, 25% or more of the voting stock of the Company; (ii) the
complete liquidation of the Company; (iii) the merger, reorganization or consolidation of the Company with or into one or more entities, the result of which is that the Company shall cease to exist as an independent entity, unless the surviving
entity is controlled by the Company or by any persons or entities that immediately preceding such event owned, directly or indirectly, individually or in combination, 25% or more of the voting stock of the Company; (iv) a change in the actual or
beneficial ownership of the Company’s stock so that Mr. Henry Arnberg no longer possesses sufficient voting power, directly or indirectly, to elect a majority of its Board of Directors; or (v) a change in the membership of the Board of
Directors of the Company during the Term of this Agreement, as a result of which the persons who were directors on February 1, 2008 shall cease to constitute at least a majority of the Board, unless the election of each director who was not a
director on the

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Commencement Date shall have been approved in advance by at least a majority of the directors then in office who were directors on the Commencement Date.

          (b) “Good Reason” shall exist if: (i) there is a significant reduction in the nature or the scope of Executive’s authority; (ii) there is a
reduction in Executive’s Base Salary; or (iii) there is a change in the actual or beneficial ownership of the Company’s stock so that Mr. Henry Arnberg no longer possesses sufficient voting power, directly or indirectly, to elect a
majority of its Board of Directors.

          9.3 Limitation on Benefits. If any payment or distribution to be made pursuant to this Section 9 (the “Payments”), is deemed to be an “Excess Parachute Payment”
under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and, therefore, nondeductible by the Company, the Payments shall be reduced (but not below zero) to the amount, which, in total, maximizes the aggregate
present value of Payments without causing any Payment to be an Excess Parachute Payment.

The Company shall promptly give the Executive written notice of any determination that a Payment would be deemed an Excess Parachute Payment, and shall provide a detailed calculation
thereof. The Executive may then elect, in her sole discretion, which and how much of the Payments, or any other amounts due her from the Company, shall be eliminated or reduced to avoid the payment of an Excess Parachute Payment. If the Executive
does not advise the company of her election within 14 days of her receipt of such notice, the Company may determine which and how much of the Payments shall be eliminated or reduced, in accordance with this Section 9.3, and shall notify the
Executive promptly of such determination.

Because of uncertainty in the application of Section 280G of the Code, it is possible that the Company will have made Payments that should not have been made (an “Overpayment”) or
that Payments not made by the Company could have been made (an “Underpayment”). If the Internal Revenue Service shall assess a deficiency against the Company, based upon a reasonable determination that an Overpayment has been made, such
Overpayment shall be treated as a loan to the Executive. Upon demand of the Company, the Executive shall repay such amount, together with interest at the applicable Federal rate (as provided in Section 7872(f)(2) of the Code). If a determination is
made that an Underpayment has occurred, the Company shall promptly pay such Underpayment to or for the benefit of the Executive, together with interest at such applicable Federal rate.

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All determinations required under this Paragraph shall be made by the Company’s independent auditors and shall be binding upon the Company and the Executive. The initial determination
shall be made within 30 days following the Executive’s termination of employment, and the Company shall commence payments to or for the benefit of the Executive as soon as practicable following such determination and the elections described
above.

     10. Miscellaneous.

          10.1 Notices. Any
notice or other communication to a party under this Agreement shall be in writing, and if by use of the mail shall be considered given when mailed by certified mail, return receipt requested, to the party at the following address or at such other
address as the party may specify by notice to the other:

	
If to the Company:
        
	 	
 Hirsch International Corp.
        
	 	
 50 Engineers Road
        
	 	
 Hauppauge, New York 11788
        
	 	
 Attn: Paul Gallagher, President and Chief Executive Officer
        
	 	 
	
With a copy to:
        
	 	
 Bryan Cave LLP
        
	 	
 1290 Avenue of the Americas
        
	 	New York, NY 10104
        
	 	
 Attn: David Fisher, Esq.
        
	 	 
	 If to the Executive:
	 	
Beverly Eichel
        
	 	
95 Fairway View Drive
        
	 	
Commack, New York 11725
        

          10.2 Benefit. This
Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their legal representatives, successors and assigns. Insofar as the Executive is concerned this Agreement, being personal, cannot be assigned.

          10.3 Validity. The
invalidity or unenforceability of any provisions hereof shall in no way affect the validity or enforceability of any other provision.

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          10.4. Entire Agreement. The Agreement constitutes the entire Agreement between the parties, and supersedes all existing agreements between them. It may only be changed or terminated by an instrument in writing signed by both parties. The covenants of
the Executive contained in Article 6 of this Agreement shall survive the termination of this Agreement and the expiration of the Term.

          10.5 New York Law to Govern. This Agreement shall be governed by, construed and interpreted in accordance with the laws of the State of New York, without regard to its conflicts of laws principles.

          10.6 Corporate Action. The execution and delivery of this Agreement by the Company has been authorized and approved by all requisite corporate action.

          10.7 Waiver of Breach. The failure of a party to insist on strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or
any term of this Agreement. Any waiver hereto must be in writing.

          10.8 Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

          10.9 Paragraph Headings. Paragraph headings are inserted herein for convenience only and are not intended to modify, limit or alter the meaning of any provision of this Agreement.

     IN WITNESS WHEREOF, the parties hereto have set their hands and executed this Agreement as of the day and year first above written.

	 	
      HIRSCH INTERNATIONAL CORP.
        
	 	By:	
 /s/ Paul Gallagher
        
	 	 	
      

        
	 	 	
 Paul Gallagher, President and
        
	 	 	
Chief Executive Officer
        
	 
	 	 	
/s/ Beverly Eichel
        
	 	 	
      

        
	 	 	
 Beverly Eichel
        

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APPENDIX A

HIRSCH INTERNATIONAL CORP.

Annual Incentive Plan for Key Executive Employees

     Following is a description of the Hirsch International Corp, Annual Incentive Plan for Key Executive Employees (the “Incentive Plan”).

     As of the beginning of each fiscal year of the Company, Commencing with the fiscal year ended December 31, 2008, the Compensation Committee of the
Company’s Board of Directors (the “Compensation Committee”), in consultation with the Chief Executive Officer (“CEO”) of the Company will establish, a list of key executive employees who will participate in the Incentive
Plan for that year, together with a Target Bonus and Stretch Bonus Percentage for each participant. The Compensation Committee in consultation with the Chief Executive Officer will also set three annual goals for the Company’s Pre-tax Profit
(as defined below), the achievement of which will entitle the participants in the Incentive Plan to receive bonus payments. The amount of any such bonus payments paid to Executive will be determined based on the extent to which the Company achieves
or exceeds the Pre-tax Profit goals established for the fiscal year. The three levels of Pre-tax Profit and the percentage of Base Salary payable with respect to each are as follows:

	  	
(a)      	
“Minimum Profit Level”—the minimum profit level that must be achieved prior to the awarding of any bonus and that must be maintained after the payment of all bonuses under the
plan.    
	  	 	 
	 	
(b)      	
“Target Profit Level”—the profit level that must be achieved in order for each participant to receive a bonus equal to her or her Target Incentive Percentage of Base
Salary.  
	  	 	 
	 	
(c)      	
“Stretch Profit Level”—the profit level that must be achieved or exceeded in order for each participant to receive a bonus equal to her or her Stretch Incentive Percentage of
Base Salary.   

     If Pre-tax Profit is greater than the Minimum Level but less than the Target Level, or greater than the Target Level but less than the Stretch Level, all
bonuses paid under the plan shall be reduced pro-rata to reflect the proportional amount by which the Target Level or Stretch

Level was not achieved. The computation of such pro-rata reductions shall be made by the Compensation Committee, in its sole discretion, in a manner that it deems fair and equitable to all
participants and such computations shall be final and binding.

     For purposes hereof, the Company’s “Pre-tax Profit” shall be the Company’s income from operations (i) before the payment of income taxes as
set forth in the Company’s audited financial statements prepared in accordance with generally accepted accounting principles, consistently applied, (ii) after the accrual for the payment of all executive bonuses, and (iii) except to the extent
otherwise agreed to by the Compensation Committee, excluding (x) all unusual or non-recurring items, and (y) the reversal of any prior year reserves (unless such the establishment of such reserves resulted in loss of bonuses in the year of their
establishment). All bonus payments due hereunder shall be made as soon as practicable following completion of the applicable fiscal year of the Company.

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Exhibit 4.1

EXHIBIT A

FORM
OF COMMON STOCK PURCHASE WARRANT

OCULUS INNOVATIVE SCIENCES, INC.

Warrant Shares: [                                        Initial Exercise Date: September 28, 2008

          THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received,
                                         (the “Holder”) is entitled, upon the terms and subject to the limitations on
exercise and the conditions hereinafter set forth, at any time on or after the 181st day after the
date hereof (the “Initial Exercise Date”) and on or prior to the close of business on the
five year anniversary of the Initial Exercise Date (the “Termination Date”) but not
thereafter, to subscribe for and purchase from Oculus Innovative Sciences, Inc., a Delaware
corporation (the “Company”), up to
[                     shares (the “Warrant Shares”) of Common
Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the
Exercise Price, as defined in Section 2(b).

     Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase Agreement (the
“Purchase Agreement”), dated March 27, 2008, among the Company and the purchasers signatory
thereto.

     Section 2. Exercise.

     a) Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company of a duly
executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office
or agency of the Company as it may designate by notice in writing to the registered Holder
at the address of the Holder appearing on the books of the Company); and, within 3 Trading
Days of the date said Notice of Exercise is delivered to the Company, the Company shall have
received payment of the aggregate Exercise Price of the shares thereby purchased by wire
transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein
to the contrary, the Holder shall not be required to physically surrender this Warrant to
the Company until the Holder has purchased all of the Warrant Shares available hereunder and
the Warrant has been exercised in full, in which case, the Holder shall surrender this
Warrant to the Company for cancellation within 3 Trading Days of the date the final Notice
of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in
purchases of a portion of the total number of Warrant Shares available hereunder shall have
the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased. The Holder and the
Company shall maintain records showing the number of Warrant Shares purchased and the date
of such

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purchases. The Company shall deliver any objection to any Notice of Exercise Form
within 1 Business Day of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Company shall be controlling and determinative in the
absence of manifest error. The Holder and any assignee, by acceptance of this Warrant,
acknowledge and agree that, by reason of the provisions of this paragraph, following the
purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than the amount stated on the
face hereof.

     b) Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $6.85, subject to adjustment hereunder (the “Exercise Price”).

     c) Cashless Exercise. If at any time during the term of this Warrant there is
no effective Registration Statement registering, or no current prospectus available for, the
issuance or resale of the Warrant Shares by the Holder, then this Warrant may also be
exercised at such time by means of a “cashless exercise” in which the Holder shall be
entitled to receive a certificate for the number of Warrant Shares equal to the quotient
obtained by dividing [(A-B) (X)] by (A), where:

	 	(A)	 	= the VWAP on the Trading Day immediately preceding the date of
such election;
	 
	 	(B)	 	= the Exercise Price of this Warrant, as adjusted; and
	 
	 	(X)	 	= the number of Warrant Shares issuable upon exercise of this
Warrant in accordance with the terms of this Warrant by means of a cash
exercise rather than a cashless exercise.

     Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant
shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

     d) Holder’s Restrictions. The Company shall not effect any exercise of this
Warrant, and a Holder shall not have the right to exercise any portion of this Warrant,
pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance
after exercise as set forth on the applicable Notice of Exercise, the Holder (together with
the Holder’s Affiliates, and any other person or entity acting as a group together with the
Holder or any of the Holder’s Affiliates), would beneficially own in excess of the
Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence,
the number of shares of Common Stock beneficially owned by the Holder and its Affiliates
shall include the number of shares of Common Stock issuable upon exercise of this Warrant
with respect to which such determination is being made, but shall
exclude the number of shares of Common Stock which would be issuable upon (A) exercise of the remaining,
nonexercised portion of this Warrant beneficially owned by the Holder or any of its
Affiliates and (B) exercise or conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without limitation, any other Common Stock
Equivalents) subject to a limitation on conversion or exercise analogous

2

 

to the limitation contained herein beneficially owned by the Holder or any of its
affiliates.  Except as set forth in the preceding sentence, for purposes of this Section
2(d)(i), beneficial ownership shall be calculated in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by
the Holder that the Company is not representing to the Holder that such calculation is in
compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the extent that the
limitation contained in this Section 2(d) applies, the determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any
Affiliates) and of which portion of this Warrant is exercisable shall be in the sole
discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be
the Holder’s determination of whether this Warrant is exercisable (in relation to other
securities owned by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject the Beneficial Ownership Limitation, and the
Company shall have no obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated above shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules and
regulations promulgated thereunder. For purposes of this Section 2(d), in determining the
number of outstanding shares of Common Stock, a Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Form 10-Q or Form 10-K,
as the case may be, (y) a more recent public announcement by the Company or (z) any other
notice by the Company or the Company’s Transfer Agent setting forth the number of shares of
Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall
within two Trading Days confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding.  In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or exercise of securities of
the Company, including this Warrant, by the Holder or its Affiliates since the date as of
which such number of outstanding shares of Common Stock was reported. The “Beneficial
Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock
outstanding immediately after giving effect to the issuance of shares of Common Stock
issuable upon exercise of this Warrant. The Beneficial Ownership Limitation provisions of
this Section 2(d) may be waived by the Holder, at the election of the Holder, upon not less
than 61 days’ prior notice to the Company to change the Beneficial Ownership Limitation to
9.99% of the number of shares of the Common Stock outstanding immediately after giving
effect to the issuance of shares of Common Stock upon exercise of this Warrant, and the
provisions of this Section 2(d) shall continue to apply. Upon such a change by a Holder of
the Beneficial Ownership Limitation from such 4.99% limitation to such 9.99% limitation, the
Beneficial Ownership Limitation may not be further waived by the Holder. The provisions of
this paragraph shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(d) to correct this paragraph (or any portion
hereof) which may be defective or inconsistent with the intended Beneficial Ownership
Limitation herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this paragraph shall
apply to a successor holder of this Warrant.

3

 

	 	e)	 	Mechanics of Exercise.

     i. Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the transfer agent of the
Company to the Holder by crediting the account of the Holder’s prime broker
with the Depository Trust Company through its Deposit Withdrawal Agent
Commission (“DWAC”) system if the Company is a participant in such
system and either (A) there is an effective Registration Statement for the
issuance or permitting the resale of the Warrant Shares by the Holder or
this Warrant is being exercised via cashless exercise, and otherwise by
physical delivery to the address specified by the Holder in the Notice of
Exercise within 3 Trading Days from the delivery to the Company of the
Notice of Exercise Form, surrender of this Warrant (if required) and payment
of the aggregate Exercise Price as set forth above (“Warrant Share
Delivery Date”). This Warrant shall be deemed to have been exercised on
the date the Exercise Price is received by the Company. The Warrant Shares
shall be deemed to have been issued, and Holder or any other person so
designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the Warrant has been
exercised by payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if
any, pursuant to Section 2(e)(vi) prior to the issuance of such shares, have
been paid. If the Company fails for any reason to deliver to the Holder
certificates evidencing the Warrant Shares subject to a Notice of Exercise
by the Warrant Share Delivery Date, the Company shall pay to the Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant
Shares subject to such exercise (based on the VWAP of the Common Stock on
the date of the applicable Notice of Exercise), $2 per Trading Day
(increasing to $4 per Trading Day on the fifth Trading Day after such
liquidated damages begin to accrue) for each Trading Day after such Warrant
Share Delivery Date until such certificates are delivered.

     ii. Delivery of New Warrants Upon Exercise. If this Warrant
shall have been exercised in part, the Company shall, at the request of a
Holder and upon surrender of this Warrant certificate, at the time of
delivery of the certificate or certificates representing Warrant Shares,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase
the unpurchased Warrant Shares called for by this Warrant, which new Warrant
shall in all other respects be identical with this Warrant.

     iii. Rescission Rights. If the Company fails to cause its
transfer agent to transmit to the Holder a certificate or certificates
representing the Warrant Shares pursuant to this Section 2(e)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to rescind
such exercise.

4

 

     iv. Compensation for Buy-In on Failure to Timely Deliver
Certificates Upon Exercise. In addition to any other rights available
to the Holder, if the Company fails to cause its transfer agent to transmit
to the Holder a certificate or certificates representing the Warrant Shares
pursuant to an exercise on or before the Warrant Share Delivery Date, and if
after such date the Holder is required by its broker to purchase (in an open
market transaction or otherwise) or the Holder’s brokerage firm otherwise
purchases, shares of Common Stock to deliver in satisfaction of a sale by
the Holder of the Warrant Shares which the Holder anticipated receiving upon
such exercise (a “Buy-In”), then the Company shall (1) pay in cash
to the Holder the amount by which (x) the Holder’s total purchase price
(including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (A) the number of
Warrant Shares that the Company was required to deliver to the Holder in
connection with the exercise at issue times (B) the price at which the sell
order giving rise to such purchase obligation was executed, and (2) at the
option of the Holder, either reinstate the portion of the Warrant and
equivalent number of Warrant Shares for which such exercise was not honored
or deliver to the Holder the number of shares of Common Stock that would
have been issued had the Company timely complied with its exercise and
delivery obligations hereunder. For example, if the Holder purchases Common
Stock having a total purchase price of $11,000 to cover a Buy-In with
respect to an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000, under clause
(1) of the immediately preceding sentence the Company shall be required to
pay the Holder $1,000. The Holder shall provide the Company written notice
indicating the amounts payable to the Holder in respect of the Buy-In and,
upon request of the Company, evidence of the amount of such loss. Nothing
herein shall limit a Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation, a decree
of specific performance and/or injunctive relief with respect to the
Company’s failure to timely deliver certificates representing shares of
Common Stock upon exercise of the Warrant as required pursuant to the terms
hereof.

     v. No Fractional Shares or Scrip. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of
this Warrant. As to any fraction of a share which Holder would otherwise be
entitled to purchase upon such exercise, the Company shall at its election,
either pay a cash adjustment in respect of such final fraction in an amount
equal to such fraction multiplied by the Exercise Price or round up to the
next whole share.

     vi. Charges, Taxes and Expenses. Issuance of certificates for
Warrant Shares shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the

5

 

Company, and such certificates shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder;
provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder; and the Company
may require, as a condition thereto, the payment of a sum sufficient to
reimburse it for any transfer tax incidental thereto.

     vii. Closing of Books. The Company will not close its
stockholder books or records in any manner which prevents the timely
exercise of this Warrant, pursuant to the terms hereof.

Section 3. Certain Adjustments.

     a) Stock Dividends and Splits. If the Company, at any time while this Warrant
is outstanding: (A) pays a stock dividend or otherwise makes a distribution or distributions
on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of
Common Stock issued by the Company upon exercise of this Warrant), (B) subdivides
outstanding shares of Common Stock into a larger number of shares, (C) combines (including
by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (D) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock (excluding
treasury shares, if any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding immediately after such
event and the number of shares issuable upon exercise of this Warrant shall be
proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain
unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective
immediately after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the effective
date in the case of a subdivision, combination or re-classification.

     b) Subsequent Rights Offerings. If the Company, at any time while the Warrant
is outstanding, shall issue rights, options or warrants to all holders of Common Stock (and
not to Holders) entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the VWAP at the record date mentioned below, then the Exercise
Price shall be multiplied by a fraction, of which the denominator shall be the number of shares of the Common Stock outstanding on the date of issuance of such rights or warrants
plus the number of additional shares of Common Stock offered for subscription or purchase,
and of which the numerator shall be the number of shares of the Common Stock outstanding on
the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered (assuming receipt by the
Company in full of all consideration payable upon exercise of such rights, options or
warrants) would purchase at such VWAP. Such

6

 

adjustment shall be made whenever such rights or warrants are issued, and shall become
effective immediately after the record date for the determination of stockholders entitled
to receive such rights, options or warrants.

     c) Pro Rata Distributions. If the Company, at any time while this Warrant is
outstanding, shall distribute to all holders of Common Stock (and not to Holders of the
Warrants) evidences of its indebtedness or assets (including cash and cash dividends) or
rights or warrants to subscribe for or purchase any security other than the Common Stock
(which shall be subject to Section 3(b)), then in each such case the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the record date
fixed for determination of stockholders entitled to receive such distribution by a fraction
of which the denominator shall be the VWAP determined as of the record date mentioned above,
and of which the numerator shall be such VWAP on such record date less the then per share
fair market value at such record date of the portion of such assets or evidence of
indebtedness so distributed applicable to one outstanding share of the Common Stock as
determined by the Board of Directors in good faith. In either case the adjustments shall be
described in a statement provided to the Holder of the portion of assets or evidences of
indebtedness so distributed or such subscription rights applicable to one share of Common
Stock. Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date mentioned above.

     d) Fundamental Transaction. If, at any time while this Warrant is outstanding,
(A) the Company effects any merger or consolidation of the Company with or into another
Person, (B) the Company effects any sale of all or substantially all of its assets in one or
a series of related transactions, (C) any tender offer or exchange offer (whether by the
Company or another Person) is completed pursuant to which holders of Common Stock are
permitted to tender or exchange their shares for other securities, cash or property, or (D)
the Company effects any reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for
other securities, cash or property (each “Fundamental Transaction”), then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise immediately prior to the
occurrence of such Fundamental Transaction, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”) receivable as a
result of such merger, consolidation or disposition of assets by a
holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such
event. For purposes of any such exercise, the determination of the Exercise Price shall be
appropriately adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate
Consideration in a reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common Stock are given any choice
as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. To the extent

7

 

necessary to effectuate the foregoing provisions, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant
consistent with the foregoing provisions and evidencing the Holder’s right to exercise such
warrant into Alternate Consideration. The terms of any agreement pursuant to which a
Fundamental Transaction is effected shall include terms requiring any such successor or
surviving entity to comply with the provisions of this Section 3(e). Notwithstanding
anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash
transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities
Exchange Act of 1934, as amended, or (3) a Fundamental Transaction involving a person or
entity not traded on a national securities exchange, the Nasdaq Global Select Market, the
Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any successor entity
shall pay at the Holder’s option, exercisable at any time concurrently with or within 30
days after the consummation of the Fundamental Transaction, an amount of cash equal to the
value of this Warrant as determined in accordance with the Black Scholes Option Pricing
Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per share of
Common Stock equal to the VWAP of the Common Stock for the Trading Day immediately preceding
the date of consummation of the applicable Fundamental Transaction, (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining
term of this Warrant as of the date of consummation of the applicable Fundamental
Transaction and (iii) an expected volatility equal to the 100 day volatility obtained from
the “HVT” function on Bloomberg L.P. determined as of the Trading Day immediately following
the public announcement of the applicable Fundamental Transaction.

     e) Shareholder Approval. No adjustment pursuant to this Section 3 shall cause
the Exercise Price to be decreased to an amount that would require shareholder approval
under any applicable shareholder approval provisions, rules or regulations of any Trading
Market applicable to the Company unless and until such shareholder approval is obtained.

     f) Calculations. All calculations under this Section 3 shall be made to the
nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this
Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a
given date shall be the sum of the number of shares of Common Stock
(excluding treasury shares, if any) issued and outstanding.

     g) Notice to Holder.

     i. Adjustment to Exercise Price. Whenever the Exercise Price is
adjusted pursuant to any provision of this Section 3, the Company shall
promptly mail to the Holder a notice setting forth the Exercise Price after
such adjustment and setting forth a brief statement of the facts requiring
such adjustment.

     ii. Notice to Allow Exercise by Holder. If (A) the Company
shall declare a dividend (or any other distribution in whatever form) on the
Common Stock; (B) the Company shall declare a special nonrecurring

8

 

cash dividend on or a redemption of the Common Stock; (C) the Company
shall authorize the granting to all holders of the Common Stock rights or
warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights; (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common
Stock, any consolidation or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets of the Company, of any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property; (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company; then, in each case, the Company shall cause to be mailed to the
Holder at its last address as it shall appear upon the Warrant Register of
the Company, at least 20 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which
a record is to be taken for the purpose of such dividend, distribution,
redemption, rights or warrants, or if a record is not to be taken, the date
as of which the holders of the Common Stock of record to be entitled to such
dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or close, and the
date as of which it is expected that holders of the Common Stock of record
shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be
specified in such notice. The Holder is entitled to exercise this Warrant
during the period commencing on the date of such notice to the effective
date of the event triggering such notice.

Section 4. Transfer of Warrant.

     a) Transferability. Subject to compliance with any applicable securities laws,
this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender
of this Warrant at the principal office of the Company or its designated agent, together
with a written assignment of this Warrant substantially in the form attached hereto duly
executed by the Holder or its agent or attorney and funds sufficient to pay any transfer
taxes payable upon the making of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination or denominations specified in such instrument
of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this
Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if
properly assigned, may be exercised by a new holder for the purchase of Warrant Shares
without having a new Warrant issued.

9

 

     b) New Warrants. This Warrant may be divided or combined with other Warrants
upon presentation hereof at the aforesaid office of the Company, together with a written
notice specifying the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any
transfer which may be involved in such division or combination, the Company shall execute
and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided
or combined in accordance with such notice. All Warrants issued on transfers or exchanges
shall be dated the original Issue Date and shall be identical with this Warrant except as to
the number of Warrant Shares issuable pursuant thereto.

     c) Warrant Register. The Company shall register this Warrant, upon records to
be maintained by the Company for that purpose (the “Warrant Register”), in the name
of the record Holder hereof from time to time. The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof or any distribution to the Holder, and for all other purposes, absent actual
notice to the contrary.

Section 5. Miscellaneous.

     a) No Rights as Shareholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights or other rights as a shareholder of the Company prior to the
exercise hereof as set forth in Section 2(e)(i).

     b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants
that upon receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of this Warrant or any stock certificate relating to the
Warrant Shares, and in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it (which, in the case of the Warrant, shall not include the
posting of any bond), and upon surrender and cancellation of such Warrant or stock
certificate, if mutilated, the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or
stock certificate.

     c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein shall not be
a Business Day, then such action may be taken or such right may be exercised on the next
succeeding Business Day.

     d) Authorized Shares.

          The Company covenants that during the period the Warrant is outstanding, it
will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any
purchase rights under this Warrant. The Company further covenants that its issuance
of this Warrant shall constitute full authority to its officers who are charged with
the duty of executing stock certificates to

10

 

execute and issue the necessary certificates for the Warrant Shares upon the
exercise of the purchase rights under this Warrant. The Company will take all such
reasonable action as may be necessary to assure that such Warrant Shares may be
issued as provided herein without violation of any applicable law or regulation, or
of any requirements of the Trading Market upon which the Common Stock may be listed.
The Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the
purchase rights represented by this Warrant, be duly authorized, validly issued,
fully paid and nonassessable and free from all taxes, liens and charges created by
the Company in respect of the issue thereof (other than taxes in respect of any
transfer occurring contemporaneously with such issue).

     Except and to the extent as waived or consented to by the Holder, the Company
shall not by any action, including, without limitation, amending its certificate of
incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all such
terms and in the taking of all such actions as may be necessary or appropriate to
protect the rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will (a) not increase
the par value of any Warrant Shares above the amount payable therefor upon such
exercise immediately prior to such increase in par value, (b) take all such action
as may be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant,
and (c) use commercially reasonable efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction thereof
as may be necessary to enable the Company to perform its obligations under this
Warrant.

     Before taking any action which would result in an adjustment in the number of
Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the
Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

     e) Jurisdiction. All questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be determined in accordance with the
provisions of the Purchase Agreement.

     f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant, if not registered, will have restrictions upon resale imposed
by state and federal securities laws.

     g) Nonwaiver and Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as a waiver of such right

11

 

or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding the fact
that all rights hereunder terminate on the Termination Date. If the Company willfully and
knowingly fails to comply with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees,
including those of appellate proceedings, incurred by Holder in collecting any amounts due
pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

     h) Notices. Any notice, request or other document required or permitted to be
given or delivered to the Holder by the Company shall be delivered in accordance with the
notice provisions of the Purchase Agreement.

     i) Limitation of Liability. No provision hereof, in the absence of any
affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no
enumeration herein of the rights or privileges of Holder, shall give rise to any liability
of Holder for the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the Company.

     j) Remedies. Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific performance of
its rights under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the defense in any action for
specific performance that a remedy at law would be adequate.

     k) Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of and be binding
upon the successors of the Company and the successors and permitted assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all Holders from time to
time of this Warrant and shall be enforceable by any the Holder or holder of Warrant Shares.

     l) Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and the Holder.

     m) Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law, but if any
provision of this Warrant shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of this Warrant.

     n) Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

12

 

     IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer
thereunto duly authorized as of the date first above indicated.

	 	 	 	 	 
	 	OCULUS INNOVATIVE SCIENCES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

13

 

NOTICE OF EXERCISE

	 	 	 
	TO:

	 	OCULUS INNOVATIVE SCIENCES, INC.
	 

	 	ATTN: [JIM SCHUTZ]

          (1) The
undersigned hereby elects to purchase ___ Warrant Shares of the Company pursuant
to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of
the exercise price in full, together with all applicable transfer taxes, if any.

          (2) Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] the cancellation of such number of Warrant Shares as is necessary, in
accordance with the formula set forth in subsection 2(c), to exercise this
Warrant with respect to the maximum number of Warrant Shares purchasable
pursuant to the cashless exercise procedure set forth in subsection 2(c).

          (3) Please issue a certificate or certificates representing said Warrant Shares in the name of
the undersigned or in such other name as is specified below:

                                                            

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery
of a certificate to:

                                                            

                                                            

                                                            

[SIGNATURE OF HOLDER]

                                                            

	 	 	 	 	 	 	 
	Name of Investing Entity:	 	 	 	 
	 	 	 	 	 
	Signature of Authorized Signatory of Investing Entity:	 	 
	 

	 	 	 	 	 	 
	Name of Authorized Signatory:	 	 	 	 
	 	 	 	 	 
	Title of Authorized Signatory:	 	 	 	 
	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 	 	 

 

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

     FOR VALUE RECEIVED, [___] all of or [___] shares of the foregoing Warrant and all rights
evidenced thereby are hereby assigned to

	 	 	 	 	 	 	 
	 

	 	whose address is	 	 	 	 
	 

	 	 	 	 	 	 
	 	.	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 

	 	 	 
	 

	 	Dated:                      , ___

	 	 	 	 	 	 	 
	 

	 	Holder’s Signature:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Holder’s Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 

Signature Guaranteed:                                                             

NOTE: The signature to this Assignment Form must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign the foregoing
Warrant.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00139-of-00352.parquet"}]]