Document:

oculus_10q-ex0416.htm

Exhibit 4.16

 

 

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

     

No. 836

Date of Issuance: November 10, 2011

WARRANT TO PURCHASE

SHARES OF COMMON STOCK OF

OCULUS INNOVATIVE SCIENCES, INC.

(Void after November 30, 2018)

_______________________________________________

This certifies that VENTURE LENDING & LEASING VI, LLC, a Delaware limited liability company, or assigns (the “Holder”), for value received, is entitled to purchase from OCULUS INNOVATIVE SCIENCES, INC., a Delaware corporation (the “Company”), Forty One Thousand One Hundred and Eighty Seven (41,187) fully paid and nonassessable shares of Company’s common stock (the “Shares”), for cash, at a purchase price per share (the
“Stock Purchase Price”) equal to $1.5175. Holder may also exercise this Warrant on a cashless or “net issuance” basis as described in Section 1(b) below, and this Warrant shall be deemed to have been exercised in full on such basis on the Expiration Date (hereinafter defined), to the extent not fully exercised prior to such date. If in any case such number involves a fraction, the fraction shall be adjusted to the closest integral number.  The Stock Purchase Price and the number of shares purchasable hereunder are subject to further adjustment as provided in Section 4 of this Warrant.  This Warrant is issued in connection with the Loan and Security Agreement of even date herewith (as amended, restated and supplemented from time to time, the
“Loan Agreement”), between Company, as borrower, and Venture Lending & Leasing VI, Inc., a subsidiary of Holder, as lender (“Lender”).  Capitalized terms used herein and not otherwise defined in this Warrant shall have the meaning(s) ascribed to them in the Loan Agreement, unless the context would otherwise require.    

 

This Warrant may be exercised at any time or from time to time up to and including 5:00 p.m.  (Pacific time) on November 30, 2018 (the “Expiration Date”), upon surrender to the Company at its principal office at 1129 North McDowell Blvd., Petaluma, California 94954 (or at such other location as the Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly filled in and signed and upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance
with the provisions hereof.

        

  

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This Warrant is subject to the following terms and conditions:

 

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

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

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

    

	X =	Y(A-B)
	A

 

	
Where:    

	
X

	
=

	the number of Shares to be issued to Holder

 

	
  

	
Y

	
=

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

 

	
  

	
A

	
=

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

 

	
  

	
B

	
=

	
the Stock Purchase Price then in effect.

 

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

   

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

   

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

   

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

   

  

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

 

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

   

Section 2.   Limitation on Transfer.

      

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

 

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

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

 

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

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

    

  

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

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

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

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

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

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

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

    

  

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4.3   Change of Control.

 

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

 

(b)    Notwithstanding anything to the contrary set forth in Section 4.3(a), at the first to occur of: (i) a Change of Control, (ii) the Company’s having closed a round of equity financing equal to or exceeding $20,000,000 in aggregate additional equity (a round of equity financing is defined as a transaction or a series of transactions with substantially the same terms and excludes the exercise or conversion of any securities outstanding on the day the Warrant is issued), or (iii) July 31, 2015 (each, a “Put Event”), at Holder’s
option, Holder may elect, within sixty (60) days of such Put Event, to surrender this Warrant in full to Company in exchange for a cash payment in an amount equal to $156,250.

 

4.4   Intentionally Omitted.

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

4.6   Other Notices.  If at any time:

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

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

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

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

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

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

    

  

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

 

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

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

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

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

Section 8.   Intentionally Omitted.

     

  

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Section 9.              Intentionally Omitted.

     

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

 

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

 

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

 

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

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

 

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

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

 

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

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

     

  

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

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

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

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

 

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

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

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

 

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

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

18.6   Intentionally Omitted.

    

  

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

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

 

  

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

 

OCULUS INNOVATIVE SCIENCES, INC.

 

 

By:        /s/ Robert E. Miller

Name:   Robert E. Miller

Title:     Chief Financial Officer

 

 

VENTURE LENDING & LEASING VI, LLC,

a Delaware limited liability company

By:        Westech Investment Advisors LLC,

               a California limited liability company

Its:         Managing Member

 

By:       ___________________________

Name:  ___________________________

Title:    ___________________________

    

  

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FORM OF SUBSCRIPTION

(To be signed only upon exercise of Warrant)

 

To:    OCULUS INNOVATIVE SCIENCES, INC.

	
o

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

    

	
o

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

 

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

 

 

	 	
Dated     ______________________

 

Holder:   ______________________

 

By:          ______________________

 

Its:          ______________________

 

 

(Address)

 

__________________________

 

__________________________

    

   

	
(1)

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

    

  

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ASSIGNMENT

 

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

 

 

	Name of Assignee	Address	No. of Shares

 

                                                                                                 

 

	 	
Dated     ______________________

 

Holder:   ______________________

 

By:          ______________________

 

Its:          ______________________

 

    

    

  

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EXHIBIT "A"

[On letterhead of the Company]

Reference is hereby made to that certain Warrant dated November 10, 2011, issued by OCULUS INNOVATIVE SCIENCES, INC, a Delaware corporation (the "Company"), to VENTURE LENDING & LEASING VI, INC., a Maryland corporation (the "Holder").

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

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

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

Executed this ___ day of ________________, 20____.

 

	 	
OCULUS INNOVATIVE SCIENCES, INC

By:           ________________________________

Name:      ________________________________

Title:        ________________________________

 

 

 

 

 

 

13ex10-1.htm

SETTLEMENT AND CROSS LICENSE AGREEMENT

This Settlement and Cross License Agreement (this “Agreement”), effective as of December 14, 2011 (the “Effective Date”), is made and entered into by and among Finisar Corporation, a Delaware corporation with its principal place of business at 1389 Moffett Park Drive, Sunnyvale, California  94089-1134 (“Finisar”), on the one hand, and Oplink Communications, Inc. and Optical Communication Products, Inc. (collectively referred to as “Oplink”) with their principal place of business at 46335 Landing Parkway, Fremont, California 94538, on the other hand (Finisar and Oplink are collectively referred to as “the Parties” or individually as a “Party”).

 

R E C I T A L S

WHEREAS, Finisar has filed a lawsuit against Oplink in the United States District Court for the Northern District of California, Finisar Corp. v. Oplink Communications, Inc., et al., Case No. 3:10-cv-05617-RS, (the “Finisar California Case”), and has also filed two lawsuits against Oplink in the Intellectual Property Court in the People’s Republic of China, 2011 Zhuhai Intermediate Court Civil Case Nos. 562 & 563, (the “Finisar China Cases”);

WHEREAS, Oplink has filed a lawsuit against Finisar in the United States District Court for the Eastern District of Texas, Optical Communication Products, Inc. v. Finisar Corp., Case No. 6:11-cv-00104-LED, (the “Oplink Texas Case”) and Finisar has filed counterclaims against Oplink in this case, and Oplink has also filed a lawsuit against Finisar in the United States District Court for the Northern District of California, Oplink Communications, Inc., et al., v. Finisar Corp., Case No. 11-cv-02361-EMC (the “Oplink California Case”) (the Finisar California Case, Finisar China Cases, Oplink Texas Case, and Oplink California Case are collectively referred to as the “Litigation”);

WHEREAS, Finisar and Oplink desire to settle each of the claims and counterclaims asserted by any Party against any other Party in the Litigation and to dismiss each case in the Litigation on the terms and conditions respectively set forth in this Agreement;

WHEREAS, Finisar and Oplink and/or their respective Affiliates each own and have rights under various U.S. and/or foreign patents and/or applications related to optoelectronic devices;

WHEREAS, Finisar and Oplink and/or their respective Affiliates have manufactured and sold, and intend to continue manufacturing and selling, optoelectronic devices;

WHEREAS, Oplink, for itself and on behalf of its Affiliates, wishes to obtain from Finisar and its Affiliates a license to certain U.S. and/or foreign patents and/or applications owned by Finisar;

WHEREAS, Finisar, on behalf of itself and its Affiliates, wishes to obtain from Oplink and its Affiliates a license to certain U.S. and/or foreign patents and/or applications owned by Oplink and its Affiliates; and

WHEREAS, Finisar and its Affiliates are willing to grant such license to Oplink and its Affiliates, and Oplink and its Affiliates are willing to grant such license to Finisar and its Affiliates, subject to the terms and conditions hereinafter contained.

NOW THEREFORE, for valuable consideration including the License Fee, mutual covenants and promises exchanged herein, the Parties agree as follows:

	
1.  

	
Definitions

1.1 Definitions.  As used in this Agreement, the following defined terms shall have the meanings set forth below:

 

“Affiliate” means with respect to a Party, any corporation or other entity that now or hereafter is controlled by or is under common control with such Party directly or indirectly through one or more intermediaries; provided, however, in connection with, or subsequent to, any Change of Control, no additional corporation or entity shall become an Affiliate based solely on being under common control with such Party.  For the purpose of this

 

  

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definition, “control” means the direct or indirect ownership of more than 50% of the outstanding voting securities of the legal entity, the right to receive more than 50% of the profits or earnings of the legal entity, or the right to direct the policy decisions of the legal entity.  Notwithstanding the foregoing, in any jurisdiction where local law shall not permit foreign equity participation of at least 50%, then “control” shall mean the maximum percentage of such outstanding stock or rights permitted by such local law.

 

“Change of Control” means any transaction or event (or series of transactions or events), whether by an acquisition of securities, merger, consolidation, proxy contest, sale of all or substantially all of a Party’s assets, or other transaction or event (or series of transactions or events), that results in a Party not being controlled, directly or indirectly, by a party (whether alone or with others) that controlled such Party before such transaction or event (or series of transactions or events), whether or not such Party survives such transaction or event (or series of transactions or events).  For the sole purpose of this definition and Section 9, “control” means possession of, or the power or right to acquire possession of, directly or indirectly, the power to direct or cause the direction of the management, business affairs or policies of such Party (whether through ownership of securities, partnership or other ownership interests, by contract or otherwise).

“Covenant Product” of an applicable Party means any product that, as of the Effective Date, is both (1) made and sold by either (a) (i) Oplink, or (ii) the Affiliates of Oplink as of the Effective Date, or (b) (i) Finisar, or (ii) the Affiliates of Finisar as of the Effective Date, as applicable, and (2) within one of the product categories listed in Attachment A for the applicable Party as such product categories were used by the applicable Party on its website as of December 1, 2011.  For avoidance of doubt, (x) no “ODM” or “OEM” products, as identified on the December 1, 2011 website of Oplink, such as without limitation a net-ready optical protection switch, wavelength blocker, wavelength select switch (“WSS”), or ROADM product, shall be a Covenant Product and (y) no “WSS ROADM” products, as identified on the December 1, 2011 website of Finisar, such as without limitation DWP100, DWP50, DWPf and EWP, shall be a Covenant Product.

“Effective Date” has the meaning ascribed thereto in the preamble of this Agreement.

“Finisar Licensed Patents” means each patent asserted by Finisar in the Litigation, as well as each U.S. or foreign patent in the same Patent Family of the foregoing whenever issued.

“Oplink Licensed Patents” means each patent asserted by Oplink in the Litigation, as well as each U.S. or foreign patent in the same Patent Family of the foregoing whenever issued.

                “Patent Family” means the collective group of patents issuing from a common application or from any application that claims priority to a common application and further including, without limitation, all patents constituting or issuing from any substitutions, extensions, reissues, renewals, reexaminations, divisionals, continuations, continuations-in-part, requests for continued examination, and continued prosecution applications for any of the foregoing collective group of patents, as well as all corresponding patents issued in countries other than the country or jurisdiction associated with any of the foregoing.

“Grantee” means Finisar or Oplink, as the case may be, as the Party to which licenses and other rights are granted hereunder.

“Grantor” means Finisar or Oplink, as the case may be, as the Party granting (on behalf of itself and its Affiliates) licenses and/or other rights hereunder.

“Grantor Licensed Patents” means Finisar Licensed Patents or Oplink Licensed Patents, as the case may be.

“Licensed Products” means any optoelectronic device, such as a transceiver, transponder, active cable, laser, or other devices with similar functionality, which for purposes of the licenses and other rights granted to Finisar, Oplink, and their respective Affiliates include, but are not limited to, all products accused of infringing any patent in the Litigation.

“Licensed Revenue Cap” means the Revenue generated by a Grantee and its Affiliates from the sale of Licensed Products in the most recently completed twelve (12) month period ending on the last day of the last full month preceding a Change of Control of such Grantee.  Commencing on the first day of the first full month after the

 

 

  

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Change of Control and at each successive anniversary thereof during the term of this Agreement, the Licensed Revenue Cap for the upcoming twelve (12) full-month period shall be increased by 5% above the cap applicable to the immediately preceding twelve (12) full-month period.  To the extent any such upcoming twelve (12) full-month period exceeds the term of this Agreement, the Licensed Revenue Cap applicable to the remaining term of the Agreement shall be reduced pro rata to the proportion of the upcoming twelve (12) full-month period that is within the term of this Agreement.

“Past Damages” means any and all damages that have accrued or resulted as of the Effective Date on account of any and all patent infringement by any Licensed Product that has been made, used, sold, offered for sale, imported, or distributed by Finisar, Oplink, or their respective Affiliates as of the Effective Date of this Agreement.

                “Revenue” means the gross amount received on all sales of Licensed Products by Grantee or assignee, as the case may be, and, as applicable, its Affiliates, less the following items: (i) trade, quantity, and cash discounts or rebates actually allowed and taken and any adjustments thereto, including, without limitation, those granted on account of price adjustments, billing errors, rejected goods, damaged goods, and recall returns; (ii) credits, refunds, rebates, charge-backs, prime vendor rebates, fees, reimbursements, or similar payments granted or given to wholesalers and other distributors, and buyer groups; (iii) any tax, tariff, customs duties, excise, or other duties or governmental charges (other than an income tax) levied on the sale, transportation, or delivery of a Licensed Product and borne by the seller thereof; (iv) payments or rebates paid in connection with sales of Licensed Products to any governmental or regulatory authority in respect of any state or federal payment or reimbursement scheme or similar program; and (v) any charge for freight, insurance, or other transportation costs borne by the seller.  For purposes of determining Revenue, a sale shall be deemed to have occurred when payment has been received.  With respect to sales through agents, the gross amount received shall be the greater of the amount received by the Grantee or assignee, as the case may be, and, as applicable, its Affiliates, and/or the agent for each given unit of the Licensed Products.  With respect to sales of Licensed Products for which there is no distinct invoice (e.g., for Licensed Products that are sold and/or used as part of a larger product), the Revenue shall be the average sales price of such Licensed Product when sold separately, multiplied by the number of applicable units sold.

2. License Fee

 

2.1 License Fee.  As part of the consideration for the license granted by Finisar, Oplink agrees to make a onetime, non-refundable payment to Finisar in the amount of four million dollars ($4,000,000.00), due within five (5) business days after the Effective Date of the Agreement.  In addition to all remedies available under this Agreement and under applicable law, the lower of either a 20% annual interest rate or the maximum annual interest rate allowed by law shall apply to any delinquent payment.

 

3. License Grant

 

3.1 Finisar License Grant to Oplink.  Subject to the terms and conditions of this Agreement, Finisar for itself and on behalf of its Affiliates hereby grants to Oplink and its Affiliates, in each case only for so long as the applicable Affiliate remains an Affiliate of Oplink, and Oplink for itself and on behalf of its Affiliates hereby accepts, a worldwide, non-exclusive, fully paid-up license to the Finisar Licensed Patents to use, make, sell, offer for sale, import, and distribute Licensed Products.  Such license shall be non-sublicensable and, subject to Section 9, non-transferable.

 

3.2 Oplink License Grant to Finisar.  Subject to the terms and conditions of this Agreement, Oplink for itself and on behalf of its Affiliates hereby grant to Finisar and its Affiliates, in each case for so long as the applicable Affiliate remains an Affiliate of Finisar, and Finisar for itself and on behalf of its Affiliates hereby accepts a worldwide, non-exclusive, fully paid-up license to the Oplink Licensed Patents to use, make, sell, offer for sale, import, and distribute Licensed Products.  Such license shall be non-sublicensable and, subject to Section 9, non-transferable.

 

3.3 Limit on Third Party Foundry Rights. The license granted to Oplink and its Affiliates to manufacture Licensed Products for a third party shall only apply to Licensed Products for which the specifications for the finished Licensed Products (but not necessarily each component) were created at least partially by or for Oplink or any of its Affiliates.

 

  

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3.4 Binding on Affiliates.  To the extent, if any, that this Agreement is not automatically binding on an Affiliate of a Party on or before the Effective Date, such Party will cause such Affiliate to be bound by the terms and conditions of this Agreement applicable to Affiliates to the same extent as if such Affiliate were a party to this Agreement.  For avoidance of doubt, if an Affiliate of a Party ceases to be an Affiliate of such Party, all licenses and other rights granted to such Affiliate under the terms of this Agreement shall terminate effective on the date such Affiliate status ceases to exist.   Notwithstanding such event or any term or condition of this Agreement to the contrary, all licenses granted by a Party on behalf of such Affiliate to a Grantee and its Affiliates prior to the date such entity ceases to be an Affiliate shall continue in full force and effect for the term of this Agreement.

 

3.5 Unrestricted Rights to Grantor Patents.  A Grantor shall retain the unrestricted right to use the Grantor Licensed Patents, and to license the Grantor Licensed Patents for any purpose whatsoever, except to the extent that any such use or license is inconsistent with the licenses and other rights granted herein.  Except for the licenses and rights expressly granted hereunder, no right, title, or interest, including with respect to any discovery, invention or other technology, data or information, or any patent, copyright, trademark, service mark, or other industrial or intellectual property rights owned or controlled by a Grantor or any third party, shall be granted to a Grantee or its Affiliates or any person, by implication or otherwise, under this Agreement.  A Grantor and its Affiliates shall not be under any obligation under this Agreement to grant to the Grantee or its Affiliates any additional licenses and rights other than those granted hereby.

 

3.6 Covenant Not to Sue.  Until December 31, 2015, Finisar, for itself and on behalf of its Affiliates, and Oplink for itself and on behalf of its Affiliates (together, the “Covenanting Party” as the case may be), and their respective successors and assigns, hereby mutually covenant to not sue Oplink or any of its Affiliates or Finisar or any of its Affiliates, as the case may be (in each case, the “Benefited Party”), for infringement of any patent, including any patents owned by a Covenanting Party now or in the future or owned by their successors or assigns now or in the future, based on a Covenant Product of the applicable Benefited Party, as well any product that is a future revision of a Covenant Product that is no more than colorably different from a Covenant Product of such Benefited Party in terms of the features disclosed in any patent subject to this Covenant Not to Sue.  For avoidance of doubt, the benefits conferred by the covenant will apply to any successor or assigns of a Party in the event of a Change of Control subject to Section 9 of this Agreement; however, no acquisition, merger, consolidation, reorganization, or similar transaction will expand the scope of products subject to this covenant to include products made or sold by an entity that is not a Benefited Party as of the Effective Date of this Agreement or to include products made or sold by any Affiliate of Oplink or Finisar after such entity ceases to be an Affiliate of Oplink or Finisar.

 

4. Assignment of Oplink Patent Families to Finisar

 

4.1 Finisar shall the right to select any five (5) Patent Families, owned by or assigned to Oplink or its Affiliates that are directed to active products.  Finisar shall make its selection at any time after the Effective Date of this Agreement and before July 1, 2012 (“the Assigned Patent Families”).  Immediately upon each selection, Oplink shall promptly assign all right, title, and interest to the selected Patent Family to Finisar.  For clarification purposes, active products include transceivers, transmitters and receivers, lasers, and include products that convert electrical signals to light and/or light to electrical signals for the purpose of sending and receiving optical signals using circuits powered by electricity.

 

4.2 Upon assignment of the Assigned Patent Families, Finisar shall grant to Oplink and its Affiliates, in each case only for so long as the applicable Affiliate remains an Affiliate of Oplink, a worldwide, non-exclusive, fully paid-up license to the Assigned Patent Families to use, make, sell, offer for sale, import, and distribute Licensed Products.  Such license shall be non-sublicensable and, subject to Section 9, non-transferable.

 

  

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5. Patent Marking.  Oplink and its Affiliates shall place a mark on every Licensed Product, or packaging therefor, which mark shall indicate the appropriate U.S. or foreign-issued patent numbers arising under the Finisar Licensed Patents pursuant to this Agreement in a manner reasonably required to satisfy 35 U.S.C. Section 287 or the equivalent statute, rule or regulation in the applicable jurisdiction.  In addition to any other required marking, Oplink and its Affiliates shall mark every product accused of infringement in the Litigation, and all current or future products with corresponding characteristics to those that gave rise to the allegation of infringement, with each patent number of which it was accused of infringing.  The obligation to mark the Licensed Products exists with regard to only those patent numbers that Finisar has provided to Oplink and its Affiliates, which Finisar may update from time to time as additional patents issue to Finisar.  Failure to comply with this marking requirement set forth in this Section 5 shall constitute a material breach of this Agreement.  Oplink and its Affiliates shall require any agents operating on their behalf to reproduce such patent marking in each copy of the Licensed Product, or packaging therefor, and not to alter or obfuscate such patent marking.

 

6. Releases

 

6.1 Finisar’s Release.   Finisar for itself and on behalf of its Affiliates and assigns and successors, hereby fully and forever releases and discharges Oplink, its Affiliates as of the Effective Date of this Agreement, and the current and former officers, directors, attorneys, employees, representatives, agents, successors and assigns from all claims, demands, damages, liabilities, costs, attorneys’ fees, expenses, and causes of action asserted in the Litigation.  For the avoidance of doubt, this release shall not have any effect on any claim, including claims for patent infringement of the Finisar Licensed Patents or any other patent, based on conduct occurring after the Effective Date of this Agreement except for conduct permitted under Section 3.1 and 3.6.

 

6.2 Oplink’s Release.  Oplink for itself and on behalf of its Affiliates and their assigns and successors, hereby fully and forever releases and discharges Finisar, its Affiliates as of the Effective Date of this Agreement, and the current and former officers, directors, attorneys, employees, representatives, agents, successors and assigns from all claims, demands, damages, liabilities, costs, attorneys’ fees, expenses, and causes of action asserted in the Litigation.  For the avoidance of doubt, this release shall not have any effect on any claim, including claims for patent infringement of the Oplink Licensed Patents or any other patent, based on conduct occurring after the Effective Date of this Agreement except for conduct permitted under Section 3.2 and 3.6.

 

6.3 Limitation of Releases.  For the avoidance of doubt, the releases set forth in this Section 6 do not apply to actions to enforce any requirements or provisions of this Agreement.

 

6.4 Dismissal of the Litigation.  By no later than December 14, 2011, the Parties shall jointly, as applicable, file a Stipulation of Dismissal requesting the dismissal with prejudice of all claims and counterclaims asserted at any time in the Litigation.  The Stipulation of Dismissal shall provide that each Party bear its own costs, expenses, and attorneys fees.

 

7. Warranties; Disclaimer; Limitation of Liability

 

7.1 Mutual Warranty.  Each Party hereby represents and warrants that (i) it has the full right and power, on behalf of itself and its Affiliates, to enter into and perform this Agreement, and to grant the license, covenants and the other rights set forth in this Agreement, (ii)  it has been duly authorized by all necessary corporate or other organizational actions to execute, deliver and perform its obligations under this Agreement, (iii) upon execution and delivery of this Agreement by all Parties, this Agreement is binding on and enforceable against such Party and its Affiliates, and (iv) there are no outstanding agreements, assignments,  encumbrances, or obligations of such Party or any of its Affiliates that are inconsistent with this Agreement.  Each Party warrants and represents that its execution hereof has been duly authorized by all its necessary corporate action.

 

  

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7.2 Warranty Disclaimer.  AS TO THE SUBJECT MATTER OF THIS AGREEMENT, AND EXCEPT AS EXPRESSLY PROVIDED IN SECTION 7.1, THE GRANTOR MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, OR ASSUMES ANY RESPONSIBILITIES WHATSOEVER WITH RESPECT TO THE COMMERCIAL SUCCESS, USE, SALE, OR OTHER DISPOSITION BY OR FOR GRANTEE OR THEIR DISTRIBUTORS, USERS, OTHER CUSTOMERS, OR SUPPLIERS OF PRODUCTS INCORPORATING OR MADE BY THE USE OF INVENTIONS LICENSED HEREIN.  Nothing in this Agreement shall be construed as:

 

	
(a)  

	
an admission by Grantee or any of its Affiliates as to the validity, enforceability or infringement of any Grantor Patents, except as provided by Section 7.4 below; or

 

	
(b)  

	
a warranty or representation by a Grantor or any of its Affiliates as to the validity or scope of any patent; or

 

	
(c)  

	
a warranty or representation by a Grantor or any of its Affiliates that anything made, used, sold or otherwise disposed of under any license granted herein is or will be free from infringement of patents or other intellectual property rights of third persons; or

 

	
(d)  

	
a requirement that a Grantor or any of its Affiliates shall file any patent application, secure any patent, or maintain any patent in force; or

 

	
(e)  

	
an obligation of a Grantor or any of its Affiliates to bring or prosecute actions or suits against third parties for infringement of any of its patents or to defend any suit or action brought by a third party which challenges or concerns any of its patents; or

 

	
(f)  

	
an obligation of a Grantor or any of its Affiliates to furnish any manufacturing and technical information or any information concerning pending patent applications; or

 

	
(g)  

	
conferring a right to use in advertising, publicity, or otherwise any trademark or trade name of a Grantor or any of its Affiliates.

 

7.3 Limitation of Liability.  IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE OTHER PARTY OR PARTIES FOR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL LOSS OR DAMAGES OF ANY NATURE WHATSOEVER CONNECTED WITH OR RESULTING FROM THE PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT, IRRESPECTIVE OF WHETHER SUCH DAMAGES ARE REASONABLY FORESEEABLE AND REGARDLESS OF WHETHER SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR NOT.

 

7.4 Validity of the Licensed Patents.  The Parties hereby acknowledge the validity and enforceability of the Licensed Patents and, during the term of this Agreement, the Parties will not file any suit in any United States Court or any Court in any foreign country, or file any proceeding in the U.S. Patent and Trademark Office, challenging or contesting the validity of the Licensed Patents or help any third party in doing so.

 

8. Term and Termination

 

8.1 Term.  The term of this Agreement shall be from the Effective Date hereof until the expiration date of the last to expire patent in either the Finisar Licensed Patents or the Oplink Licensed Patents.

 

  

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8.2 Limited Termination.  This Agreement may not be terminated for any reason prior to its expiration under Section 8.1, and each Party agrees that its remedy for any breach of this Agreement shall be to bring a claim to recover damages and to seek any other appropriate equitable relief (other than termination of this Agreement).

 

8.3 Survival.  The provisions of Sections 2, 4, 7, 10, and 11, Subsections 6.1, 6.2, 6.3, 9.3, 9.4, and this Section 8.3 shall survive expiration of this Agreement.

 

9. Assignment and Change of Control

 

9.1 Assignment.   None of the Parties shall assign by operation of law or otherwise to any third party any of its rights or obligations under this Agreement without prior written consent of the other Parties, except that each Party shall have the right, without the requirement of obtaining consent from the other Parties, to assign this Agreement to an acquiring party, in connection with a Change of Control of such Party (including a transfer to such third party by operation of law) subject to Subsection (a) below.

 

	
(a)  

	
Assignment in Connection with Change of Control Where Grantee is Not The Surviving Entity.  In each successive Change of Control of a Grantee where such Grantee is not a surviving entity, such Grantee may assign this Agreement to an acquiring party or an entity controlled by an acquiring party in connection with such Change of Control (including by transfer to such third party by operation of law) without the prior written consent of the other Parties, subject to the following terms and conditions.  Following the Change of Control, the license of the Agreement shall be deemed to be limited to, and cover, the sale of Licensed Products solely to the extent that such sales result in Revenue up to, and not to exceed, the Licensed Revenue Cap for the applicable period following the Change of Control; provided that the assignee may elect, in its sole discretion, to pay or cause to be paid to the Grantor a 5% royalty on that portion of the worldwide Revenue attributable to the sale of Licensed Products that is in excess of the Licensed Revenue Cap for the applicable period (in which event the Licensed Products for which the associated Revenue is in excess of the Licensed Revenue Cap shall remain and be within, and covered by, the scope of the license).  For avoidance of doubt, in the event the assignee does not elect to pay or cause to be paid the 5% royalty described above, the sale of Licensed Products in excess of the Licensed Revenue Cap does not result in a breach of the Agreement, but shall not be considered licensed.  Notwithstanding anything herein to the contrary, for the purpose of calculating Revenue under this Agreement, to the extent a Licensed Product is sold as a component of a product, such as a switch or router, the amount included in Revenue with respect to such Licensed Product shall be based on the average per unit Revenue of such Licensed Product for the corresponding period when sold separately as a component.

 

9.2 Change of Control Where Grantee is a Surviving Entity.  In each successive Change of Control of Grantee where a Grantee is a surviving entity, from and after the Change of Control the license granted to such Grantee shall be deemed to be limited to, and cover, the sale of Licensed Products solely to the extent that such sales result in Revenue up to, and not to exceed, the Licensed Revenue Cap for the applicable period following the Change of Control, unless the Grantee elects, in its sole discretion, to pay or cause to be paid to the Grantor a 5% royalty on that portion of the worldwide Revenue attributable to the sale of Licensed Products that is in excess of the Licensed Revenue Cap for the applicable period (in which event the Licensed Products for which the associated Revenue is in excess of the Licensed Revenue Cap shall remain and be within, and covered by, the scope of the license).  Notwithstanding anything herein to the contrary, for the purpose of calculating Revenue under this Agreement, to the extent a Licensed Product is sold as a component of a product, such as a switch or router, the amount included in Revenue with respect to such Licensed Product shall be based on the average per unit Revenue of such Licensed Product for the corresponding period when sold separately as a component.

 

  

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9.3 Reporting and Record Keeping Requirements.  Within fourteen (14) days after each successive Change of Control, such Grantee or the assignee, as the case may be (the “Reporting Party”), shall provide written notice to Grantor of such Change of Control.  This notice shall either acknowledge that the Reporting Party is subject to the Licensed Revenue Cap or shall provide all information reasonably necessary to verify that the Reporting Party is not subject to the Licensed Revenue Cap.  Unless the Reporting Party has demonstrated that it is not subject to the Licensed Revenue Cap, the Reporting Party shall comply with the provisions of Sections 9.3(a), (b), (c), and (d).

 

	
(a)  

	
Licensed Revenue Cap Determination.  Within twenty-five (25) business days after each successive Change of Control, the Reporting Party shall provide to Grantor a report of the worldwide Revenue generated by the sale of Licensed Products in the most recently completed twelve (12) full months preceding such Change of Control.  Such report shall also include a list of all revenue generating products of the Reporting Party and an indication with respect to each product as to whether or not such product is a Licensed Product.  Such report shall provide all information necessary to determine the Licensed Revenue Cap.  For the avoidance of doubt, the Reporting Party will not be required to disclose pricing information.

 

	
(b)  

	
Quarterly Revenue Reports.  Subsequent to such Change of Control, in addition to the report described in Section 9.3(a), the Reporting Party shall provide within forty-five (45) days after the close of each fiscal quarter during the term of this Agreement (including the close of any fiscal quarter immediately following the expiration and any termination of this Agreement), reports to Grantor setting forth all of the worldwide Revenue generated by the sale of Licensed Products by the Grantee, its successor or assignee, and their respective Affiliates during such quarter.  Such reports shall also include a list of all revenue generating products of the Reporting Party and an indication with respect to each product as to whether or not such product is a Licensed Product.  For the avoidance of doubt, the Reporting Party will not be required to disclose pricing information.

 

	
(c)  

	
Records Retention.  The Reporting Party shall keep true and accurate records and books of accounting data reasonably required for the computation and verification of reports provided pursuant to this Agreement.  The Reporting Party shall retain records or books with respect to such reports for a period of five (5) years from the date such record is generated.  This retention requirement shall not be deemed to reduce any statute of limitations period applicable to any potential claim and shall survive any expiration of this Agreement.

 

	
(d)  

	
Distribution of Reports.  The parties agree that reports will be provided to and held in confidence by the Finisar and Oplink representatives identified pursuant to Section 10.  The parties further agree that the receiving party will not further distribute the information without the written authorization of the Reporting Party, which authorization will not be unreasonably withheld.

 

	
(e)  

	
Right of Inspection.  All records and books maintained pursuant to Section 9.3(c) shall be open for inspection upon reasonable notice (which shall not be less than ten (10) days in advance) during business hours by an independent certified accountant reasonably selected by Grantor and reasonably acceptable to the Reporting Party, provided that such inspection shall not occur more than once annually.  This Right of Inspection shall survive any expiration or termination of this Agreement.  The party performing the inspection will be required to sign a confidentiality agreement limiting the disclosure of information solely to (1) conclusions regarding the accuracy of prior reports; (2) the method used to calculate Revenue, and (3) other information agreed to by the Parties as necessary to evaluate the calculation of Revenue.  The confidentiality agreement will further limit the disclosure of information to the Finisar and Oplink representatives identified pursuant to Section 10.

 

9.4 Licensed Revenue Cap Does Not Apply To Finisar.  Finisar and its Affiliates shall not be subject to the Licensed Revenue Cap or the Reporting and Record Keeping Requirements provided by Section 9.3, regardless of any Change of Control.

 

  

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10. Notices.  All notices, including notices of change of address, required or permitted to be given hereunder shall be sufficiently given when personally delivered, delivered by overnight courier or mailed prepaid first class registered or certified mail and addressed to the Party for whom it is intended at its record address, and such notice shall be effective upon receipt, if delivered personally, or delivered by overnight courier, or shall be effective five (5) days after it is deposited in the mail, if mailed.  The record addresses and facsimile numbers of the Parties are set forth below:

 

	
If to Finisar:

1389 Moffett Park Drive

Sunnyvale, California 94089

United States

Attn: General Counsel

Fax: 408-541-5660

Phone: 408-548-1000

	
If to Oplink:

46335 Landing Parkway

 Fremont, California 94538

United States

Attn: General Counsel

Fax: 510-933-7300

Phone: 510-933-7200

 

Any Party, at any time, may change its previous record address or facsimile number by giving written notice of the substitution in accordance with the provision of this Section 10.

11. General Provisions

 

11.1 Entire Agreement.   This Agreement constitutes the entire agreement and understanding among the Parties, with respect to its subject matter and supersedes any prior or contemporaneous agreements or understandings relating to the subject matter.  There are no representations, promises, agreements, warranties, covenants or undertakings among the Parties other than those contained herein.

 

11.2 Interpretation.  Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “whereby” and derivative or similar words refer to this Agreement; and (iv) the term “Section” refers to the specified Section of this Agreement.  Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless otherwise specified.

 

11.3 Patent Assignment/Encumbrance.   None of the Parties shall assign to any third party or encumber any of its Patents pursuant to this Agreement, unless such assignment or encumbrance is made subject to the terms and conditions of this Agreement.

 

11.4 Amendment; No Waiver.  This Agreement may be amended only by a writing executed by Finisar and Oplink.  A Party may waive in writing compliance by a Party with any of the terms, covenants or conditions contained in this Agreement (except such as may be imposed by law).  No delay or omission on the part of any Party to this Agreement in requiring performance by the other Party or Parties or in exercising any right hereunder shall operate as a waiver of any provision hereof or of any right or rights hereunder, and the waiver, omission or delay in requiring performance or exercising any right hereunder on any given occasion shall not be construed as a bar to or waiver of such performance or right, or of any right or remedy under this Agreement on any future occasion.

 

  

9

  

 

11.5 Severability.  Each Section or subsection of this Agreement shall be distinct and separate and, unless otherwise specified, the invalidity, illegality or unenforceability of any Section or subsection shall have no effect on any other Section or subsection.  If a court or tribunal declares a provision of this Agreement invalid, illegal or unenforceable, the Agreement will be deemed automatically adjusted to the minimum extent necessary to be valid.

 

11.6 Governing Law.  This Agreement shall be interpreted, construed and enforced in accordance with the laws of the State of California, without reference to its choice of law rules, except to the extent preempted by the laws of the United States of America.

 

11.7 Exclusive Jurisdiction.  With respect to any controversy, claim, or dispute arising out of or in connection with this Agreement, the Parties hereby irrevocably submit to the exclusive jurisdiction, including personal, subject matter, or both, and venue in the United States District Court for the Northern District of California, or an appropriate court in Santa Clara County, California, and agrees to accept service of process by mail and waives any jurisdictional or venue defenses otherwise available.

 

11.8 Attorneys’ Fees.  In the event of any action to enforce this Agreement or on account of any breach of or default under this Agreement arising out of Section 2.1, the prevailing party in such action shall be entitled to recover, in addition to any other relief to which it may be entitled, all reasonable attorneys’ incurred by the prevailing party in connection with such action (including, but not limited to, any appeal thereof).

 

11.9 Interpretation of Agreement.  The Parties have participated in the negotiation and drafting of this Agreement.  In the event that any ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no rule of construction, presumption or burden of proof shall arise favoring one Party concerning the interpretation of ambiguous provisions or otherwise by virtue of one Party’s presumed authorship of this Agreement or any provision hereof.

 

11.10 Further Assurances.  Each Party shall do, or cause to be done, all such further acts, and shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, any and all such further documentation as the other Party reasonably requires to carry out the purposes of this Agreement.

 

11.11 Reasonable and Non-Discriminatory License Offer.  Oplink and its Affiliates acknowledge that the license to the Finisar Patents is offered by Finisar under reasonable terms and conditions that are demonstrably free of any unfair discrimination.

 

11.12 Confidentiality.  The Parties and their Affiliates agree to keep the terms of this Agreement in confidence and shall not disclose any portion to any third parties, except: (a) when necessary to enforce the terms of this Agreement; (b) as required by law, or judicial, administrative, or regulatory order, including as required by applicable securities laws or regulations or by rule of any recognized stock exchange; or (c) to communicate necessary information to the Parties’ accountants, consultants, lenders, creditors, insurers, brokers, agents, attorneys, and other persons who have a need to know in order (i) to carry out the terms of this Agreement or (ii) for the Parties to conduct its ordinary business activities.

 

11.13 No Admission; No Decision on the Merits.  This Agreement sets forth a compromise and settlement of disputed claims for the purpose of avoiding the costs, disruptions, and uncertainties associated with litigation.  Such compromise and settlement does not constitute a ruling on the merits, an admission as to any issue of fact or principle at law or an admission of liability of any Party.  Any such admission of liability is expressly denied.  It is also expressly agreed that neither this Agreement, its execution, the performance of any of its terms nor any of its contents shall be offered in any proceeding as evidence or an admission of liability for patent infringement, validity, or willfulness.

 

11.14 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 agreement.

 

  

10

  

 

    IN WITNESS WHEREOF, each of the Parties has caused this Settlement and Cross License Agreement to be executed by its duly authorized officer as of the date and year first above written.

 

	
Finisar Corporation

By:  /s/ Chris Brown 

Name:    Chris Brown 

Title:      EVP & General Counsel 

Date:      December 14, 2011 

	
Oplink Communcations, Inc.

By:  /s/ Stephen M. Welles 

Name:   Stephen M. Welles 

Title:     VP & General Counsel 

Date:     December 14, 2011 

	  	
Optical Communication Products, Inc.

By:  /s/ Stephen M. Welles 

Name:   Stephen M. Welles 

Title:     VP & General Counsel 

Date:     December 14, 2011 

 

  

11

  

ATTACHMENT A

 

	
Oplink Existing Product Categories

	
Finisar Existing Product Categories

	
Mux/Demux

· TFF Platform

· Fused Fiber Platform

· AWG

· Interleaver

Switching/Routing

· Optical Switches (opto-mechanical)

· Optical Circulators

Coupling/Splitting

· Power/Tap Couplers

· WDM And Band Splitters

· Splitter Modules

· PLC Platform

Monitoring/Conditioning

· Power Monitors

· VOAs

Amplifications

· Fused Bionical Tapered (FBT) Amp Components

· Isolators/Hybrid Amp Components

· Thin-Film Filter Amp Components

· Mini Series Amp Components

· Raman Amp Components

Polarizations

· Polarization Maintaining Components

Transceivers

· CFP

· XFP

· SFP+

· SFP

· SFF

· GBIC

· 1x9/2x9

PON

Transmitters & Receivers

Interconnect

· Patchcord

· Attenuator & Terminator

· Adapter

· Connector

· Distribution Enclosure

RGB Laser Module

· Fiber Coupled Laser Module

	
Optical Modules

· SFP

· SFP+

· CFP

· SFF

· GBIC

· PON

· XFP

· XPAK

· X2

· XENPAK

· 300-PIN

Optical Components

· VCSELs and Detectors

· Lasers and Detectors

· Sensor VCSELs

· CML Transmitters

Passives

· MUX / DEMUX

· Interleavers

· Optical Isolators

· PLC Chips

· Splitter / Splitter Modules

Active Cables

· Laserwire

· Quadwire

· C.wire

Optical Instrumentation

· WaveShaper 100S

· WaveShaper 120S

· WaveShaper 1000S

· WaveShaper 4000S

· WaveShaper M

Analog & CATV Solution

· 1U Modular Products

· Outdoor Products

· 2GHz Analog Modules

· 3GHz Analog Modules

· 6GHz Analog Modules

· 18GHz Analog Modules

· 22GHz Analog Modules

· GPS and Reference Optical Links

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