Document:

Unassociated Document

     

    
      Exhibit 10.26

       

      SECURITIES
PURCHASE AGREEMENT

       

           This
Securities Purchase Agreement (this “Agreement”) is dated
as of August 7, 2007, between Oculus Innovative Sciences, Inc., a Delaware
corporation (the “Company”), and each
purchaser identified on the signature pages hereto (each, including its
successors and assigns, a “Purchaser” and
collectively the “Purchasers”).

       

           WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the “Securities
Act”), and Rule 506 promulgated thereunder, the Company desires to issue
and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

       

           NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement,
and for other good and valuable consideration the receipt and adequacy of which
are hereby acknowledged, the Company and each Purchaser agree as
follows:

       

      ARTICLE
I.

      DEFINITIONS

       

           1.1 Definitions. In
addition to the terms defined elsewhere in this Agreement, for all purposes of
this Agreement, the following terms have the meanings set forth in this
Section 1.1:

       

           “Action” shall have
the meaning ascribed to such term in Section 3.1(j).

       

           “Affiliate” means any
Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person as such terms are
used in and construed under Rule 405 under the Securities Act. With respect
to a Purchaser, any investment fund or managed account that is managed on a
discretionary basis by the same investment manager as such Purchaser will be
deemed to be an Affiliate of such Purchaser.

       

           “Board of Directors”
means the board of directors of the Company.

       

           “Business Day” means
any day except any Saturday, any Sunday, any day which is a federal legal
holiday in the United States or any day on which banking institutions in the
State of New York are authorized or required by law or other governmental action
to close.

       

           “Closing” means the
closing of the purchase and sale of the Securities pursuant to
Section 2.1.

       

           “Closing Date” means
the Trading Day when all of the Transaction Documents have been executed and
delivered by the applicable parties thereto, and all conditions precedent to
(i) the Purchasers’ obligations to pay the Subscription Amount and
(ii) the Company’s obligations to deliver the Securities have been
satisfied or waived.

       

           “Commission” means the
Securities and Exchange Commission.

       

      
        
          
          

        

        
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           “Common Stock” means
the common stock of the Company, par value $0.0001 per share, and any other
class of securities into which such securities may hereafter be reclassified or
changed into.

       

           “Common Stock
Equivalents” means any securities of the Company or the Subsidiaries
which would entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, rights, options,
warrants or other instrument that is at any time convertible into or exercisable
or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.

       

           “Company Counsel”
means Pillsbury Winthrop Shaw Pittman LLP, with offices located at 2475
Hannover, Palo Alto, California 94304.

       

           “Disclosure Schedules”
means the Disclosure Schedules of the Company delivered concurrently
herewith.

       

           “Effective Date” means
the date that the initial Registration Statement filed by the Company pursuant
to the Registration Rights Agreement is first declared effective by the
Commission.

       

           “Evaluation Date”
shall have the meaning ascribed to such term in Section 3.1(r).

       

           “Exchange Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

       

           “Exempt Issuance”
means the issuance of (a) shares of Common Stock or options to employees,
officers or directors of the Company pursuant to any stock or option plan duly
adopted for such purpose, by a majority of the non-employee members of the Board
of Directors or a majority of the members of a committee of non-employee
directors established for such purpose at a price at least equal to the market
price at the time of the grant or issuance, (b) securities upon the
exercise or exchange of or conversion of any Securities issued hereunder and/or
other securities exercisable or exchangeable for or convertible into shares of
Common Stock issued and outstanding on the date of this Agreement, provided that
such securities have not been amended since the date of this Agreement to
increase the number of such securities or to decrease the exercise, exchange or
conversion price of such securities, and (c) securities issued pursuant to
acquisitions or strategic transactions approved by a majority of the
disinterested directors of the Company, provided that any such issuance shall
only be to a Person which is, itself or through its subsidiaries, an operating
company in a business synergistic with the business of the Company and in which
the Company receives benefits in addition to the investment of funds, but shall
not include a transaction in which the Company is issuing securities primarily
for the purpose of raising capital or to an entity whose primary business is
investing in securities.

       

           “FWS” means Feldman
Weinstein & Smith LLP with offices located at 420 Lexington Avenue,
Suite 2620, New York, New York 10170-0002.

       

           “GAAP” shall have the
meaning ascribed to such term in Section 3.1(h).

       

      
        
          
          

        

        
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           “Indebtedness” shall
have the meaning ascribed to such term in Section 3.1(aa).

       

           “Intellectual Property
Rights” shall have the meaning ascribed to such term in
Section 3.1(o).

       

           “Legend Removal Date”
shall have the meaning ascribed to such term in Section 4.1(c).

       

           “Liens” means a lien,
charge, security interest, encumbrance, right of first refusal, preemptive right
or other restriction.

       

           “Material Adverse
Effect” shall have the meaning assigned to such term in
Section 3.1(b).

       

           “Material Permits”
shall have the meaning ascribed to such term in Section 3.1(m).

       

           “Participation
Maximum” shall have the meaning ascribed to such term in Section
4.12.

       

           “Per Share Purchase
Price” equals $8.00, subject to adjustment for reverse and forward stock
splits, stock dividends, stock combinations and other similar transactions of
the Common Stock that occur after the date of this Agreement.

       

           “Person” means an
individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or subdivision thereof) or other entity of any
kind.

       

           “Placement Agent”
means Rodman & Renshaw, LLC.

       

           “Pre-Notice” shall
have the meaning ascribed to such term in Section 4.12.

       

           “Proceeding” means an
action, claim, suit, investigation or proceeding (including, without limitation,
an informal investigation or partial proceeding, such as a deposition), whether
commenced or threatened.

       

           “Purchaser Party”
shall have the meaning ascribed to such term in Section 4.8.

       

           “Registration Rights
Agreement” means the Registration Rights Agreement, dated the date
hereof, among the Company and the Purchasers, in the form of Exhibit A attached
hereto.

       

           “Registration
Statement” means a registration statement meeting the requirements set
forth in the Registration Rights Agreement and covering the resale by the
Purchasers of the Shares and the Warrant Shares.

       

           “Required Approvals”
shall have the meaning ascribed to such term in Section 3.1(e).

       

      
        
          
          

        

        
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           “Rule 144” means
Rule 144 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission having substantially the same effect as such
Rule.

       

           “SEC Reports” shall
have the meaning ascribed to such term in Section 3.1(h).

       

           “Securities” means the
Shares, the Warrants and the Warrant Shares.

       

           “Securities Act” means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

       

           “Shareholder Approval”
means such approval as may be required by the applicable rules and regulations
of the Nasdaq Stock Market (or any successor entity) from the shareholders of
the Company with respect to the transactions contemplated by the Transaction
Documents, including the issuance of all of the Shares and Warrants Shares in
excess of 19.99% of the issued and outstanding Common Stock on the Closing
Date.

       

           “Shares” means the
shares of Common Stock issued or issuable to each Purchaser pursuant to this
Agreement.

       

           “Short Sales” means
all “short sales” as defined in Rule 200 of Regulation SHO under the
Exchange Act (but shall not be deemed to include the location and/or reservation
of borrowable shares of Common Stock).

       

           “Subscription Amount”
means, as to each Purchaser, the aggregate amount to be paid for Shares and
Warrants purchased hereunder as specified below such Purchaser’s name on the
signature page of this Agreement and next to the heading “Subscription Amount,”
in United States dollars and in immediately available funds.

       

           “Subsequent Financing”
shall have the meaning ascribed to such term in Section 4.12.

       

           “Subsequent Financing
Notice” shall have the meaning ascribed to such term in
Section 4.12.

       

           “Subsidiary” means any
subsidiary of the Company as set forth on Schedule 3.1(a), and
shall, where applicable, include any subsidiary of the Company formed or
acquired after the date hereof.

       

           “Trading Day” means a
day on which the New York Stock Exchange is open for trading.

       

           “Trading Market” means
the following markets or exchanges on which the Common Stock is listed or quoted
for trading on the date in question: the American Stock Exchange, the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the
New York Stock Exchange or the OTC Bulletin Board.

       

           “Transaction
Documents” means this Agreement, the Warrants, the Registration Rights
Agreement and any other documents or agreements executed in connection with the
transactions contemplated hereunder.

       

           “Transfer Agent” means
Mellon Investor Services, LLC the current transfer agent of the Company, with a
mailing address of 525 Market Street, Suite 3500, San Francisco,
CA 94105
and a facsimile number of 415-951-4181, and any successor transfer agent of the
Company.

       

      
        
          
          

        

        
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           “VWAP” means, for any
date, the price determined by the first of the following clauses that applies:
(a) if the Common Stock is then listed or quoted on a Trading Market, the
daily volume weighted average price of the Common Stock for such date (or the
nearest preceding date) on the Trading Market on which the Common Stock is then
listed or quoted for trading as reported by Bloomberg L.P. (based on a Trading
Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time);
(b) if the OTC Bulletin Board is not a Trading Market, the volume weighted
average price of the Common Stock for such date (or the nearest preceding date)
on the OTC Bulletin Board; (c) if the Common Stock is not then quoted for
trading on the OTC Bulletin Board and if prices for the Common Stock are then
reported in the “Pink Sheets” published by Pink Sheets, LLC (or a similar
organization or agency succeeding to its functions of reporting prices), the
most recent bid price per share of the Common Stock so reported; or (d) in
all other cases, the fair market value of a share of Common Stock as determined
by an independent appraiser selected in good faith by the Purchasers of a
majority in interest of the Shares then outstanding and reasonably acceptable to
the Company, the fees and expenses of which shall be paid by the
Company.

       

           “Warrants” means,
collectively, the Common Stock purchase warrants delivered to the Purchasers at
the Closing in accordance with Section 2.2(a) hereof, which Warrants shall
be exercisable 181 days after the Closing Date and have a term of exercise
equal to 5 years, in the form of Exhibit C attached
hereto.

       

           “Warrant Shares” means
the shares of Common Stock issuable upon exercise of the Warrants.

       

      ARTICLE
II.

      PURCHASE
AND SALE

       

           2.1 Closing. On the
Closing Date, upon the terms and subject to the conditions set forth herein,
substantially concurrent with the execution and delivery of this Agreement by
the parties hereto, the Company agrees to sell, and the Purchasers, severally
and not jointly, agree to purchase, up to an aggregate of $20,000,000 of Shares
and Warrants. Each Purchaser shall deliver to the Company, via wire transfer,
immediately available funds equal to its Subscription Amount and the Company
shall deliver to each Purchaser its respective Shares and a Warrant as
determined pursuant to Section 2.2(a), and the Company and each Purchaser
shall deliver, or cause to be delivered, the other items set forth in
Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants
and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur
at the offices of FWS or such other location as the parties shall mutually
agree.

       

           2.2 Deliveries.

       

           (a)
On or prior to the Closing Date, the Company shall deliver or cause to be
delivered to each Purchaser the following:

       

           (i)
this Agreement duly executed by the Company;

       

      
        
          
          

        

        
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           (ii)
a legal opinion of Company Counsel, substantially in the form of Exhibit B attached
hereto;

       

           (iii)
a copy of the irrevocable instructions to the Transfer Agent instructing the
Transfer Agent to deliver, on an expedited basis, a certificate evidencing a
number of Shares equal to such Purchaser’s Subscription Amount divided by the
Per Share Purchase Price, registered in the name of such Purchaser;

       

           (iv)
a Warrant registered in the name of such Purchaser to purchase up to a number of
shares of Common Stock equal to 33% of the number of shares of Common Stock
purchased by such Purchaser, with an exercise price equal to $9.50, subject to
adjustment therein; and

       

           (v)
the Registration Rights Agreement duly executed by the Company.

       

           (b)
On or prior to the Closing Date, each Purchaser shall deliver or cause to be
delivered to the Company the following:

       

           (i)
this Agreement duly executed by such Purchaser;

       

           (ii)
such Purchaser’s Subscription Amount by wire transfer to the account as
specified in writing by the Company;

       

           (iii)
the Registration Rights Agreement duly executed by such Purchaser;
and

       

           (iv)
a certificate of the Placement Agent to the Company, substantially in the form
of Exhibit D hereto.

       

           2.3 Closing
Conditions.

       

           (a)
The obligations of the Company hereunder in connection with the Closing are
subject to the following conditions being met:

       

           (i)
the accuracy in all material respects on the Closing Date of the representations
and warranties of the Purchasers contained herein;

       

           (ii)
all obligations, covenants and agreements of each Purchaser required to be
performed at or prior to the Closing Date shall have been performed;
and

       

           (iii)
the delivery by each Purchaser of the items set forth in Section 2.2(b) of
this Agreement.

       

           (b)
The respective obligations of the Purchasers hereunder in connection with the
Closing are subject to the following conditions being met:

       

      
        
          
          

        

        
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           (i)
the accuracy in all material respects on the Closing Date of the representations
and warranties of the Company contained herein;

       

           (ii)
all obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing Date shall have been
performed;

       

           (iii)
the delivery by the Company of the items set forth in Section 2.2(a) of
this Agreement;

       

           (iv)
there shall have been no Material Adverse Effect with respect to the Company
since the date hereof; and

       

           (v)
from the date hereof to the Closing Date, trading in the Common Stock shall not
have been suspended by the Commission or the Company’s principal Trading Market
(except for any suspension of trading of limited duration agreed to by the
Company, which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing Date, trading in securities generally as reported by
Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall
not have been established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium have been
declared either by the United States or New York State authorities nor shall
there have occurred any material outbreak or escalation of hostilities or other
national or international calamity of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each case, in the
reasonable judgment of [each Purchaser, makes it [impracticable or inadvisable]
to purchase the Securities at the Closing.

       

      ARTICLE
III.

      REPRESENTATIONS
AND WARRANTIES

       

           3.1 Representations and
Warranties of the Company. Except as set forth in the Disclosure
Schedules, which Disclosure Schedules shall be deemed a part hereof and shall
qualify any representation or otherwise made herein to the extent of the
disclosure contained in the corresponding section of the Disclosure Schedules,
the Company hereby makes the following representations and warranties to each
Purchaser:

       

           (a) Subsidiaries. All of
the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a).
The Company owns, directly or indirectly, all of the capital stock or other
equity interests of each Subsidiary free and clear of any Liens, and all of the
issued and outstanding shares of capital stock of each Subsidiary are validly
issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities. If the Company has no
subsidiaries, then all other references to the Subsidiaries or any of them in
the Transaction Documents shall be disregarded.

       

      
        
          
          

        

        
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           (b) Organization and
Qualification. The Company and each of the Subsidiaries is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation or organization (as
applicable),
with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. Neither the Company nor any
Subsidiary is in violation or default of any of the provisions of its respective
certificate or certificate of incorporation, bylaws or other organizational or
charter documents. Each of the Company and the Subsidiaries is duly qualified to
conduct business and is in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the
failure to be so qualified or in good standing, as the case may be, could not
have or reasonably be expected to result in (i) a material adverse effect
on the legality, validity or enforceability of any Transaction Document,
(ii) a material adverse effect on the results of operations, assets,
business, prospects or condition (financial or otherwise) of the Company and the
Subsidiaries, taken as a whole, or (iii) a material adverse effect on the
Company’s ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
“Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such
power and authority or qualification.

       

           (c) Authorization;
Enforcement. The Company has the requisite corporate power and authority
to enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations hereunder and
thereunder. The execution and delivery of each of the Transaction Documents by
the Company and the consummation by it of the transactions contemplated hereby
and thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company, the Board of Directors
or the Company’s stockholders in connection therewith other than in connection
with the Required Approvals. Each Transaction Document has been (or upon
delivery will have been) duly executed by the Company and, when delivered in
accordance with the terms hereof and thereof, will constitute the valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except (i) as limited by general equitable principles and
applicable bankruptcy, insolvency, reorganization, moratorium and other laws of
general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be limited
by applicable law.

       

           (d) No Conflicts. The
execution, delivery and performance of the Transaction Documents by the Company,
the issuance and sale of the Securities and the consummation by the Company of
the other transactions contemplated hereby and thereby do not and will not
(i) conflict with or violate any provision of the Company’s or any
Subsidiary’s certificate or certificate of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, result in the creation of any Lien upon any of the properties or
assets of the Company or any Subsidiary, or give to others any rights of
termination, amendment, acceleration or cancellation (with or without notice,
lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding
to which the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, or
(iii) subject to the Required Approvals, conflict with or result in a
violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or
a Subsidiary is subject (including federal and state securities laws and
regulations), or by which any property or asset of the Company or a Subsidiary
is bound or affected; except in the case of each of clauses (ii) and (iii),
such as could not have or reasonably be expected to result in a Material Adverse
Effect.

       

      
        
          
          

        

        
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           (e) Filings, Consents and
Approvals. The Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Transaction Documents, other than
(i) filings required pursuant to Section 4.4 of this Agreement,
(ii) the filing with the Commission of the Registration Statement, (iii)
application(s) to each applicable Trading Market for the listing of the
Securities for trading thereon in the time and manner required thereby, and
(iv) the filing of Form D with the Commission and such filings as are
required to be made under applicable state securities laws (“Required
Approvals”).

       

           (f) Issuance of the
Securities. The Securities are duly authorized and, when issued and paid
for in accordance with the applicable Transaction Documents, will be duly and
validly issued, fully paid and nonassessable, free and clear of all Liens
imposed by the Company other than restrictions on transfer provided for in the
Transaction Documents. The Warrant Shares, when issued in accordance with the
terms of the Transaction Documents, will be validly issued, fully paid and
nonassessable, free and clear of all Liens imposed by the Company other than
restrictions on transfer provided for in the Transaction Documents. The Company
has reserved from its duly authorized capital stock the maximum number of shares
of Common Stock issuable pursuant to this Agreement and the
Warrants.

       

           (g) Capitalization. The
capitalization of the Company is as set forth on Schedule 3.1(g),
which Schedule 3.1(g) shall
also include the number of shares of Common Stock owned beneficially, and of
record, by Affiliates of the Company as of the date hereof. The Company has not
issued any capital stock since its most recently filed periodic report under the
Exchange Act, other than pursuant to the exercise of employee stock options
under the Company’s stock option plans, the issuance of shares of Common Stock
to employees pursuant to the Company’s employee stock purchase plans and
pursuant to the conversion or exercise of Common Stock Equivalents outstanding
as of the date of the most recently filed periodic report under the Exchange
Act. No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions
contemplated by the Transaction Documents. Except as a result of the purchase
and sale of the Securities, there are no outstanding options, warrants, scrip
rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for
or acquire, any shares of Common
Stock, or contracts, commitments, understandings or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock or Common Stock Equivalents. The issuance and sale of the
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are validly issued, fully
paid and nonassessable, have been issued in compliance with all federal and
state securities laws, and none of such outstanding shares was issued in
violation of any preemptive rights or similar rights to subscribe for or
purchase securities. No further approval or authorization of any stockholder,
the Board of Directors or others is required for the issuance and sale of the
Securities. There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital stock to which the
Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders.

       

      
        
          
          

        

        
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           (h) SEC Reports; Financial
Statements. The Company has filed all reports, schedules, forms,
statements and other documents required to be filed by the Company under the
Securities Act and the Exchange Act, including pursuant to Section 13(a) or
15(d) thereof, for the two years preceding the date hereof (or such shorter
period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents
incorporated by reference therein, being collectively referred to herein as the
“SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act, as applicable,
and none of the SEC Reports, when filed, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Reports comply in all material
respects with applicable accounting requirements and the rules and regulations
of the Commission with respect thereto as in effect at the time of filing. Such
financial statements have been prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved (“GAAP”), except as may
be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes
required by GAAP, and fairly present in all material respects the financial
position of the Company and its consolidated subsidiaries as of and for the
dates thereof and the results of operations and cash flows for the periods then
ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.

       

           (i) Material Changes;
Undisclosed Events, Liabilities or Developments. Since the date of the
latest audited financial statements included within the SEC Reports, except as
specifically disclosed in a subsequent SEC Report filed prior to the date
hereof, (i) there has been no event, occurrence or development that has had or
that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred
any liabilities (contingent or otherwise) other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with
past practice and (B) liabilities not required to be reflected in the Company’s
financial statements pursuant to GAAP or disclosed in filings made with the
Commission, (iii) the Company has not altered its method of accounting,
(iv) the Company has not declared or made any dividend or distribution of
cash or other property to its stockholders or purchased, redeemed or made any
agreements to purchase or redeem any shares of its capital stock and
(v) the Company has not issued any equity securities to any officer,
director or Affiliate, except pursuant to existing Company stock option plans or
securities outstanding as of the date hereof. The Company does not have pending
before the Commission any request for confidential treatment of information.
Except for the issuance of the Securities contemplated by this Agreement or as
set forth on Schedule 3.1(i),
no event, liability or development has occurred or exists with respect to the
Company or its Subsidiaries or their respective business, properties, operations
or financial condition, that would be required to be disclosed by the Company
under applicable securities laws at the time this representation is made or
deemed made that has not been publicly disclosed at least 1 Trading Day prior to
the date that this representation is made.

       

      
        
          
          

        

        
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           (j) Litigation. There is
no action, suit, inquiry, notice of violation, proceeding or investigation
pending or, to the knowledge of the Company, threatened against or affecting the
Company, any Subsidiary or any of their respective properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “Action”) which (i)
adversely affects or challenges the legality, validity or enforceability of any
of the Transaction Documents or the Securities or (ii) could, if there were
an unfavorable decision, have or reasonably be expected to result in a Material
Adverse Effect. Neither the Company nor any Subsidiary, nor any director or
officer thereof, is or has been the subject of any Action involving a claim of
violation of or liability under federal or state securities laws or a claim of
breach of fiduciary duty. There has not been, and to the knowledge of the
Company, there is not pending or contemplated, any investigation by the
Commission involving the Company or any current or former director or officer of
the Company. The Commission has not issued any stop order or other order
suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the Exchange Act or the Securities Act.

       

           (k) Labor Relations. No
material labor dispute exists or, to the knowledge of the Company, is imminent
with respect to any of the employees of the Company which could reasonably be
expected to result in a Material Adverse Effect. None of the Company’s or its
Subsidiaries’ employees is a member of a union that relates to such employee’s
relationship with the Company or such Subsidiary, and neither the Company nor
any of its Subsidiaries is a party to a collective bargaining agreement, and the
Company and its Subsidiaries believe that their relationships with their
employees are good. No executive officer, to the knowledge of the Company, is,
or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement or
non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued
employment of each such executive officer does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters.
The Company and its Subsidiaries are in compliance with all U.S. federal, state,
local and foreign laws and regulations relating to employment and employment
practices, terms and conditions of employment and wages and hours, except where
the failure to be in compliance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.

       

      
        
          
          

        

        
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           (l) Compliance. Neither
the Company nor any Subsidiary (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it
is in default under or that it is in violation of, any indenture, loan or credit
agreement or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator or governmental body, or (iii) is or has been in violation of
any statute, rule or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws applicable to its business
and all such laws that affect the environment, except in each case as could not
have or reasonably be expected to result in a Material Adverse
Effect.

       

           (m) Regulatory Permits.
The Company and the Subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the
SEC Reports, except where the failure to possess such permits could not
reasonably be expected to result in a Material Adverse Effect (“Material Permits”),
and neither the Company nor any Subsidiary has received any notice of
proceedings relating to the revocation or modification of any Material
Permit.

       

           (n) Title to Assets.
Except as set forth on Schedule 3.1(n),
the Company and the Subsidiaries have good and marketable title in fee simple to
all real property owned by them and good and marketable title in all personal
property owned by them that is material to the business of the Company and the
Subsidiaries, in each case free and clear of all Liens, except for Liens as do
not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries and Liens for the payment of federal, state or other taxes, the
payment of which is neither delinquent nor subject to penalties. Any real
property, facilities and tangible property held under lease by the Company and
the Subsidiaries are held by them under valid, subsisting and enforceable leases
with which the Company and the Subsidiaries are in compliance.

       

      
        
          
          

        

        
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           (o) Patents and
Trademarks. The Company and the Subsidiaries have, or have rights to use,
all patents, patent applications, trademarks, trademark applications, service
marks, trade names, trade secrets, inventions, copyrights, licenses and other
intellectual property rights and similar rights necessary or material for use in
connection with their respective businesses as described in the SEC Reports and
which the failure to so have could have a Material Adverse Effect (collectively,
the “Intellectual
Property Rights”). Neither
the Company nor any Subsidiary has received a notice (written or otherwise) that
any of the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person except as described onSchedule 3.1(o).
To the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of
the Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value
of all of their intellectual properties, except where failure to do so could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

       

           (p) Insurance. The
Company and the Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which the Company and the Subsidiaries are
engaged, including, but not limited to, directors and officers insurance
coverage at least equal to the aggregate Subscription Amount. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.

       

           (q) Transactions With Affiliates
and Employees. Except as set forth in the SEC Reports, none of the
officers or directors of the Company and, to the knowledge of the Company, none
of the employees of the Company is presently a party to any transaction with the
Company or any Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee or partner, in each case in excess of $60,000
other than for (i) payment of salary or consulting fees for services
rendered, (ii) reimbursement for expenses incurred on behalf of the
Company, (iii) other employee benefits, including stock option agreements under
any stock option plan of the Company, and (iv) as set forth in the SEC
Reports.

       

           (r) Sarbanes-Oxley; Internal
Accounting Controls. The Company is in material compliance with all
provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of
the Closing Date. The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management’s general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
such disclosure controls and procedures to ensure that information required to
be disclosed by the
Company in the reports it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the
Commission’s rules and forms. The Company’s certifying officers have evaluated
the effectiveness of the Company’s disclosure controls and procedures as of the
end of the period covered by the Company’s most recently filed periodic report
under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the
Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the
Evaluation Date. Since the Evaluation Date, there have been no changes in the
Company’s internal control over financial reporting (as such term is defined in
the Exchange Act) that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.

       

      
        
          
          

        

        
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           (s) Certain Fees. Except
as set forth on Schedule 3.1(s),
no brokerage or finder’s fees or commissions are or will be payable by the
Company to any broker, financial advisor or consultant, finder, placement agent,
investment banker, bank or other Person with respect to the transactions
contemplated by the Transaction Documents. The Purchasers shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of other Persons for fees of a type contemplated in this Section that may
be due in connection with the transactions contemplated by the Transaction
Documents.

       

           (t) Private Placement.
Assuming the accuracy of the Purchasers representations and warranties set forth
in Section 3.2, and the accuracy of the statements set forth in the
certificate of the Placement Agent referenced in Section 2.2(b), no
registration under the Securities Act is required for the offer and sale of the
Securities by the Company to the Purchasers as contemplated hereby. The issuance
and sale of the Securities hereunder does not contravene the rules and
regulations of the Trading Market.

       

           (u) Investment
Company. The Company is not, and is not an Affiliate of, and
immediately after receipt of payment for the Securities, will not be or be an
Affiliate of, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become subject to the Investment Company Act of 1940,
as amended.

       

           (v) Registration Rights.
Except as set forth on Schedule3.1(v), other
than each of the Purchasers, no Person has any right to cause the Company to
effect the registration under the Securities Act of any securities of the
Company.

       

           (w) Listing and Maintenance
Requirements. The Common Stock is registered pursuant to Section 12(b) or
12(g) of the Exchange Act, and the Company has taken no action designed to, or
which to its knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company
received any notification that the Commission is contemplating terminating such
registration. The Company has not, in the 12 months preceding the date
hereof, received notice from any Trading Market on which the Common Stock is or
has been listed or quoted to the effect that the Company is not in compliance
with the listing or maintenance
requirements of such Trading Market. The Company is, and has no reason to
believe that it will not in the foreseeable future continue to be, in compliance
with all such listing and maintenance requirements.

       

      
        
          
          

        

        
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           (x) Application of Takeover
Protections. The Company and the Board of Directors have taken all
necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under
a rights agreement) or other similar anti-takeover provision under the Company’s
certificate of incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Purchasers as a
result of the Purchasers and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including without
limitation as a result of the Company’s issuance of the Securities and the
Purchasers’ ownership of the Securities.

       

           (y) Disclosure. Except
with respect to the material terms and conditions of the transactions
contemplated by the Transaction Documents, the Company confirms that neither it
nor any other Person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that it believes constitutes or
might constitute material, non-public information. The Company understands and
confirms that the Purchasers will rely on the foregoing representation in
effecting transactions in securities of the Company. All disclosure furnished by
or on behalf of the Company to the Purchasers regarding the Company, its
business and the transactions contemplated hereby, including the Disclosure
Schedules to this Agreement, is true and correct and does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The press releases disseminated by the
Company during the twelve months preceding the date of this Agreement taken as a
whole do not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made and
when made, not misleading. The Company acknowledges and agrees that no Purchaser
makes or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Section 3.2 hereof.

       

           (z) No Integrated
Offering. Assuming the accuracy of the Purchasers’ representations and
warranties set forth in Section 3.2, and the accuracy of the statements set
forth in the certificate of the Placement Agent referenced in Section 2.2(b),
neither the Company, nor any of its Affiliates, nor any Person acting on its or
their behalf has, directly or indirectly, made any offers or sales of any
security or solicited any offers to buy any security, under circumstances that
would cause this offering of the Securities to be integrated with prior
offerings by the Company for purposes of (i) the Securities Act which would
require the registration of any such securities under the Securities Act, or
(ii) any applicable shareholder approval provisions of any Trading Market
on which any of the securities of the Company are listed or
designated.

       

      
        
          
          

        

        
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           (aa) Solvency. Based on
the consolidated financial condition of the Company as of the Closing Date,
after giving effect to the receipt by the Company of the proceeds from the
sale of the Securities hereunder, (i) the fair saleable value of the
Company’s assets exceeds the amount that will be required to be paid on or in
respect of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature, (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business as now conducted
and as proposed to be conducted including its capital needs taking into account
the particular capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability thereof, and
(iii) the current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets, after taking into
account all anticipated uses of the cash, would be sufficient to pay all amounts
on or in respect of its liabilities when such amounts are required to be paid.
The Company does not intend to incur debts beyond its ability to pay such debts
as they mature (taking into account the timing and amounts of cash to be payable
on or in respect of its debt). The Company has no knowledge of any facts or
circumstances which lead it to believe that it will file for reorganization or
liquidation under the bankruptcy or reorganization laws of any jurisdiction
within one year from the Closing Date. Schedule 3.1(aa) sets
forth as of the date thereof all outstanding secured and unsecured Indebtedness
of the Company or any Subsidiary, or for which the Company or any Subsidiary has
commitments. For the purposes of this Agreement, “Indebtedness” means
(a) any liabilities for borrowed money or amounts owed in excess of $50,000
(other than trade accounts payable incurred in the ordinary course of business),
(b) all guaranties, endorsements and other contingent obligations in
respect of indebtedness of others, whether or not the same are or should be
reflected in the Company’s balance sheet (or the notes thereto), except
guaranties by endorsement of negotiable instruments for deposit or collection or
similar transactions in the ordinary course of business; and (c) the
present value of any lease payments in excess of $50,000 due under leases
required to be capitalized in accordance with GAAP. Neither the Company nor any
Subsidiary is in default with respect to any Indebtedness.

       

           (bb) Tax Status. Except
for matters that would not, individually or in the aggregate, have or reasonably
be expected to result in a Material Adverse Effect, the Company and each
Subsidiary has filed all necessary federal, state and foreign income and
franchise tax returns and has paid or accrued all taxes shown as due thereon,
and the Company has no knowledge of a tax deficiency which has been asserted or
threatened against the Company or any Subsidiary.

       

           (cc) No General
Solicitation. Assuming the accuracy of the statements set forth in the
certificate of the Placement Agent referenced in Section 2.2(b),
neither the Company nor any person acting on behalf of the Company has offered
or sold any of the Securities by any form of general solicitation or general
advertising. The Company has offered the Securities for sale only to the
Purchasers and certain other “accredited investors” within the meaning of
Rule 501 under the Securities Act.

       

           (dd) Foreign Corrupt
Practices. Neither the Company, nor to the knowledge of the Company,
any agent or other person acting on behalf of the Company, has (i) directly
or indirectly, used any funds for unlawful contributions, gifts, entertainment
or other unlawful expenses related to foreign or domestic political activity,
(ii) made any unlawful payment to foreign or domestic government officials
or employees or to any foreign or domestic
political parties or campaigns from corporate funds, (iii) failed to
disclose fully any contribution made by the Company (or made by any person
acting on its behalf of which the Company is aware) which is in violation of
law, or (iv) violated in any material respect any provision of the Foreign
Corrupt Practices Act of 1977, as amended.

       

      
        
          
          

        

        
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           (ee) Accountants. The
Company’s accounting firm is set forth on Schedule
3.1(ee) of the Disclosure Schedule. To the knowledge and belief of
the Company, such accounting firm (i) is a registered public accounting
firm as required by the Exchange Act and (ii) shall express its opinion
with respect to the financial statements to be included in the Company’s Annual
Report on Form 10-K for the year ending March 31, 2008.

       

           (ff) No Disagreements with
Accountants and Lawyers. There are no disagreements of any kind
presently existing, or reasonably anticipated by the Company to arise, between
the Company and the accountants and lawyers formerly or presently employed by
the Company which could affect the Company’s ability to perform any of its
obligations under any of the Transaction Documents, the Company is current with
respect to any fees owed to its accountants and lawyers.

       

           (gg) Acknowledgment Regarding
Purchasers’ Purchase of Securities. The Company acknowledges and agrees
that each of the Purchasers is acting solely in the capacity of an arm’s length
purchaser with respect to the Transaction Documents and the transactions
contemplated thereby. The Company further acknowledges that no Purchaser is
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to the Transaction Documents and the transactions
contemplated thereby and any advice given by any Purchaser or any of their
respective representatives or agents in connection with the Transaction
Documents and the transactions contemplated thereby is merely incidental to the
Purchasers’ purchase of the Securities. The Company further represents to each
Purchaser that the Company’s decision to enter into this Agreement and the other
Transaction Documents has been based solely on the independent evaluation of the
transactions contemplated hereby by the Company and its
representatives.

       

           (hh) Acknowledgement Regarding
Purchaser’s Trading Activity. Anything in this Agreement or
elsewhere herein to the contrary notwithstanding (except for
Sections 3.2(f) and 4.14 hereof), it is understood and acknowledged by the
Company (i) that none of the Purchasers have been asked by the Company to
agree, nor has any Purchaser agreed, to desist from purchasing or selling, long
and/or short, securities of the Company, or “derivative” securities based on
securities issued by the Company or to hold the Securities for any specified
term; (ii) that past or future open market or other transactions by any
Purchaser, specifically including, without limitation, Short Sales or
“derivative” transactions, before or after the closing of this or future private
placement transactions, may negatively impact the market price of the Company’s
publicly-traded securities; (iii) that any Purchaser, and counter-parties
in “derivative” transactions to which any such Purchaser is a party, directly or
indirectly, presently may have a “short” position in the Common Stock, and
(iv) that each Purchaser shall not be deemed to have any affiliation with
or control over any arm’s length counter-party in any “derivative” transaction.
The Company
further understands and acknowledges that (a) one or more Purchasers may
engage in hedging activities at various times during the period that the
Securities are outstanding, including, without limitation, during the periods
that the value of the Warrant Shares deliverable with respect to Securities are
being determined and (b) such hedging activities (if any) could reduce the value
of the existing stockholders’ equity interests in the Company at and after the
time that the hedging activities are being conducted. The Company acknowledges
that such aforementioned hedging activities do not constitute a breach of any of
the Transaction Documents.

       

      
        
          
          

        

        
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           (ii) Regulation M
Compliance. The Company has not, and to its knowledge no one acting
on its behalf has, (i) taken, directly or indirectly, any action designed
to cause or to result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of any of the
Securities, (ii) sold, bid for, purchased, or, paid any compensation for
soliciting purchases of, any of the Securities, or (iii) paid or agreed to
pay to any Person any compensation for soliciting another to purchase any other
securities of the Company, other than, in the case of clauses (ii) and
(iii), compensation paid to the Company’s placement agent in connection with the
placement of the Securities.

       

           (jj) FDA. As to each
product subject to the jurisdiction of the U.S. Food and Drug Administration
(“FDA”) under the Federal Food, Drug and Cosmetic Act, as amended, and the
regulations thereunder (“FDCA”) that is
manufactured, packaged, labeled, tested, distributed, sold, and/or marketed by
the Company or any of its Subsidiaries (each such product, a “Pharmaceutical
Product”), such Pharmaceutical Product is being manufactured, packaged,
labeled, tested, distributed, sold and/or marketed by the Company in compliance
with all applicable requirements under FDCA and similar laws, rules and
regulations relating to registration, investigational use, premarket clearance,
licensure, or application approval, good manufacturing practices, good
laboratory practices, good clinical practices, product listing, quotas,
labeling, advertising, record keeping and filing of reports, except where the
failure to be in compliance would not have a Material Adverse Effect. Except as
set forth on Schedule 3.1(jj), there is no pending, completed or, to the
Company’s knowledge, threatened, action (including any lawsuit, arbitration, or
legal or administrative or regulatory proceeding, charge, complaint, or
investigation) against the Company or any of its Subsidiaries, and none of the
Company or any of its Subsidiaries has received any notice, warning letter or
other communication from the FDA or any other governmental entity, which
(i) contests the premarket clearance, licensure, registration, or approval
of, the uses of, the distribution of, the manufacturing or packaging of, the
testing of, the sale of, or the labeling and promotion of any Pharmaceutical
Product, (ii) withdraws its approval of, requests the recall, suspension, or
seizure of, or withdraws or orders the withdrawal of advertising or sales
promotional materials relating to, any Pharmaceutical Product, (iii) imposes a
clinical hold on any clinical investigation by the Company or any of its
Subsidiaries, (iv) enjoins production at any facility of the Company or any
of its Subsidiaries, (v) enters or proposes to enter into a consent decree
of permanent injunction with the Company or any of its Subsidiaries, or
(vi) otherwise alleges any violation of any laws, rules or regulations by
the Company or any of its Subsidiaries, and which, either individually or in the
aggregate, would have a Material Adverse Effect. The properties,
business and operations of the Company have been and are being conducted in all
material respects in accordance with all applicable laws, rules and regulations
of the FDA. The Company has not been informed by the FDA that the FDA will
prohibit the marketing, sale, license or use in the United States of any product
proposed to be developed, produced or marketed by the Company nor has the FDA
expressed any concern as to approving or clearing for marketing any product
being developed or proposed to be developed by the Company.

       

      
        
          
          

        

        
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           3.2 Representations and
Warranties of the Purchasers. Each Purchaser, for itself and for no other
Purchaser, hereby represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows:

       

           (a) Organization;
Authority. Such Purchaser is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with
full right, corporate or partnership power and authority to enter into and to
consummate the transactions contemplated by the Transaction Documents and
otherwise to carry out its obligations hereunder and thereunder. The execution
and delivery of the Transaction Documents and performance by such Purchaser of
the transactions contemplated by the Transaction Documents have been duly
authorized by all necessary corporate or similar action on the part of such
Purchaser. Each Transaction Document to which it is a party has been duly
executed by such Purchaser, and when delivered by such Purchaser in accordance
with the terms hereof, will constitute the valid and legally binding obligation
of such Purchaser, enforceable against it in accordance with its terms, except
(i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.

       

           (b) Own Account. Such
Purchaser understands that the Securities are “restricted securities” and have
not been registered under the Securities Act or any applicable state securities
law and is acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or any part
thereof in violation of the Securities Act or any applicable state securities
law, has no present intention of distributing any of such Securities in
violation of the Securities Act or any applicable state securities law and has
no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities (this representation
and warranty not limiting such Purchaser’s right to sell the Securities pursuant
to the Registration Statement or otherwise in compliance with applicable federal
and state securities laws) in violation of the Securities Act or any applicable
state securities law. Such Purchaser is acquiring the Securities hereunder in
the ordinary course of its business.

       

           (c) Purchaser Status. At
the time such Purchaser was offered the Securities, it was, and at the date
hereof it is, and on each date on which it exercises any Warrants, it will be
either: (i) an “accredited investor” as defined in
Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act
or (ii) a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act. Such Purchaser is not required to be registered as a
broker-dealer under Section 15 of the Exchange Act.

       

      
        
          
          

        

        
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           (d) Experience of Such
Purchaser. Such Purchaser, either alone or together with its
representatives, has such knowledge, sophistication and experience in business
and financial matters so as to be capable of evaluating the merits and risks of
the prospective investment in the Securities, and has so evaluated the merits
and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a
complete loss of such investment.

       

           (e) General Solicitation.
Such Purchaser is not purchasing the Securities as a result of any
advertisement, article, notice or other communication regarding the Securities
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or any other general
solicitation or general advertisement.

       

           (f) Short Sales and
Confidentiality Prior To The Date Hereof. Other than consummating the
transactions contemplated hereunder, such Purchaser has not, nor has any Person
acting on behalf of or pursuant to any understanding with such Purchaser,
directly or indirectly executed any purchases or sales, including Short Sales,
of the securities of the Company during the period commencing from the time that
such Purchaser first received notice of the identity of the Company as the
issuer in the transaction from the Company or any other Person representing the
Company contemplated hereunder until the date hereof (“Discussion Time”).
Notwithstanding the foregoing, in the case of a Purchaser that is a
multi-managed investment vehicle whereby separate portfolio managers manage
separate portions of such Purchaser’s assets and the portfolio managers have no
direct knowledge of the investment decisions made by the portfolio managers
managing other portions of such Purchaser’s assets, the representation set forth
above shall only apply with respect to the portion of assets managed by the
portfolio manager that made the investment decision to purchase the Securities
covered by this Agreement. Other than to other Persons party to this Agreement,
such Purchaser has maintained the confidentiality of all disclosures made to it
in connection with this transaction (including the existence and terms of this
transaction).

       

      ARTICLE
IV.

      OTHER
AGREEMENTS OF THE PARTIES

       

           4.1 Transfer
Restrictions.

       

           (a)
The Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of Securities other than
pursuant to an effective registration statement or Rule 144, to the Company
or to an Affiliate of a Purchaser or in connection with a pledge as contemplated
in Section 4.1(b), the Company may require the transferor thereof to
provide to the Company an opinion of counsel selected by the transferor and
reasonably acceptable to the Company, the form and substance of which opinion
shall be reasonably satisfactory to the Company, to the effect that such
transfer does not require registration of such transferred Securities under the
Securities
Act. As a condition of transfer, any such transferee shall agree in writing to
be bound by the terms of this Agreement and shall have the rights of a Purchaser
under this Agreement and the Registration Rights Agreement.

       

      
        
          
          

        

        
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           (b)
The Purchasers agree to the imprinting, so long as is required by this
Section 4.1, of a legend on any of the Securities in the following
form:

       

      THIS
SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL
INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE
SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

       

           The
Company acknowledges and agrees that a Purchaser may from time to time pledge
pursuant to a bona fide margin agreement with a registered broker-dealer or
grant a security interest in some or all of the Securities to a financial
institution that is an “accredited investor” as defined in Rule 501(a) under the
Securities Act and who agrees to be bound by the provisions of this Agreement
and the Registration Rights Agreement and, if required under the terms of such
arrangement, such Purchaser may transfer pledged or secured Securities to the
pledgees or secured parties. Such a pledge or transfer would not be subject to
approval of the Company and no legal opinion of legal counsel of the pledgee,
secured party or pledgor shall be required in connection therewith. Further, no
notice shall be required of such pledge. At the appropriate Purchaser’s expense,
the Company will execute and deliver such reasonable documentation as a pledgee
or secured party of Securities may reasonably request in connection with a
pledge or transfer of the Securities, including, if the Securities are subject
to registration pursuant to the Registration Rights Agreement, the preparation
and filing of any required prospectus supplement under Rule 424(b)(3) under
the Securities Act or other applicable provision of the Securities Act to
appropriately amend the list of Selling Stockholders thereunder.

       

      
        
          
          

        

        
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           (c)
Certificates evidencing the Shares and Warrant Shares shall not contain any
legend (including the legend set forth in Section 4.1(b)), (i) while a
registration statement
(including the Registration Statement) covering the resale of such security is
effective under the Securities Act, or (ii) following any sale of such
Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares
or Warrant Shares are eligible for sale under Rule 144(k), or (iv) if
such legend is not required under applicable requirements of the Securities Act
(including judicial interpretations and pronouncements issued by the staff of
the Commission). The Company shall cause its counsel to issue a legal opinion to
the Transfer Agent promptly after the Effective Date if required by the Transfer
Agent to effect the removal of the legend hereunder. If all or any portion of a
Warrant is exercised at a time when there is an effective registration statement
to cover the resale of the Warrant Shares, such Warrant Shares shall be issued
free of all legends. The Company agrees that following the Effective Date or at
such time as such legend is no longer required under this Section 4.1(c),
it will, no later than three (3) Trading Days following the delivery by a
Purchaser to the Company or the Transfer Agent of a certificate representing
Shares or Warrant Shares, as the case may be, issued with a restrictive legend
(such third Trading Day, the “Legend Removal
Date”), deliver or cause to be delivered to such Purchaser a certificate
representing such shares that is free from all restrictive and other legends.
The Company may not make any notation on its records or give instructions to the
Transfer Agent that enlarge the restrictions on transfer set forth in this
Section. Certificates for Securities subject to legend removal hereunder shall
be transmitted by the Transfer Agent to the Purchaser by crediting the account
of the Purchaser’s prime broker with the Depository Trust Company System as
directed by such Purchaser.

       

           (d)
In addition to such Purchaser’s other available remedies, the Company shall pay
to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for
each $1,000 of Shares or Warrant Shares (based on the VWAP of the Common Stock
on the date such Securities are submitted to the Transfer Agent) delivered for
removal of the restrictive legend and subject to Section 4.1(c), $10 per
Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such
damages have begun to accrue) for each Trading Day commencing on the third
Trading Day after the Legend Removal Date until such certificate is delivered
without a legend. In addition to any other rights available to the Purchaser, if
the Company fails to cause its transfer agent to transmit to the Purchaser an
unlegended certificate or certificates representing the Shares or Warrant
Shares, as applicable, on or before the Legend Removal Date, and if after such
date the Purchaser is required by its broker to purchase (in an open market
transaction or otherwise) or the Purchaser’s brokerage firm otherwise purchases,
shares of Common Stock to deliver in satisfaction of a sale by the Purchaser of
the Shares or Warrant Shares which the Purchaser anticipated receiving (a “Buy-In”), then the
Company shall pay in cash to the Purchaser the amount by which (x) the
Purchaser’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 Shares or Warrant Shares that the Company was
required to deliver to the Purchaser times (B) the price at which the sell
order giving rise to such purchase obligation was executed. For example, if the
Purchaser purchases Common Stock having a total purchase price of $11,000 to
cover a Buy-In with respect to an attempted sale of shares of Common Stock with
an aggregate sale price giving rise to such purchase obligation of $10,000, the
Company shall be required to pay the Purchaser $1,000.
The Purchaser shall provide the Company written notice indicating the amounts
payable to the Purchaser in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall limit such
Purchaser’s right to pursue actual damages for the Company’s failure to deliver
certificates representing any Securities as required by the Transaction
Documents, and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief.

       

      
        
          
          

        

        
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           (e)
Each Purchaser, severally and not jointly with the other Purchasers, agrees that
such Purchaser will sell any Securities pursuant to either the registration
requirements of the Securities Act, including any applicable prospectus delivery
requirements, or an exemption therefrom, and that if Securities are sold
pursuant to a Registration Statement, they will be sold in compliance with the
plan of distribution set forth therein, and acknowledges that the removal of the
restrictive legend from certificates representing Securities as set forth in
this Section 4.1 is predicated upon the Company’s reliance upon this
understanding.

       

           4.2 Furnishing of
Information. Until the earliest of the time that (i) no Purchaser
owns Securities or (ii) the Warrants have expired, the Company covenants to
use reasonable efforts to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act even if the
Company is not then subject to the reporting requirements of the Exchange Act.
As long as any Purchaser owns Securities, if the Company is not required to file
reports pursuant to the Exchange Act, it will prepare and furnish to the
Purchasers and make publicly available in accordance with Rule 144(c) such
information as is required for the Purchasers to sell the Securities under
Rule 144. The Company further covenants that it will take such further
action as any holder of Securities may reasonably request, to the extent
required from time to time to enable such Person to sell such Securities without
registration under the Securities Act within the requirements of the exemption
provided by Rule 144.

       

           4.3 Integration. The
Company shall not sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in Section 2 of the
Securities Act) that would be integrated with the offer or sale of the
Securities in a manner that would require the registration under the Securities
Act of the sale of the Securities to the Purchasers or that would be integrated
with the offer or sale of the Securities to the Purchasers for purposes of the
rules and regulations of any Trading Market such that it would require
shareholder approval prior to the closing of such other transaction unless
shareholder approval is obtained before the closing of such subsequent
transaction.

       

      
        
          
          

        

        
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           4.4 Securities Laws Disclosure;
Publicity. The Company shall, by 8:30 a.m. (New York City time) on the
Trading Day immediately following the date hereof, issue a Current Report on
Form 8-K, disclosing the material terms of the transactions contemplated hereby,
and filing the Transaction Documents as exhibits thereto. The Company and each
Purchaser shall consult with each other in issuing any other press releases with
respect to the transactions contemplated hereby, and neither the Company nor any
Purchaser shall issue any such press release or otherwise make any such public
statement without the prior consent of the Company, with respect to any press
release of any Purchaser, or without the prior consent of each Purchaser,
with respect to any press release of the Company, which consent shall not
unreasonably be withheld or delayed, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection
with (A) any registration statement contemplated by the Registration Rights
Agreement and (B) the filing of final Transaction Documents (including
signature pages thereto) with the Commission and (ii) to the extent such
disclosure is required by law or Trading Market regulations, in which case the
Company shall provide the Purchasers with prior notice of such disclosure
permitted under this clause (ii).

       

           4.5 Shareholder Rights
Plan. No claim will be made or enforced by the Company or, with the
consent of the Company, any other Person, that any Purchaser is an “Acquiring
Person” under any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or similar anti-takeover
plan or arrangement in effect or hereafter adopted by the Company, or that any
Purchaser could be deemed to trigger the provisions of any such plan or
arrangement, by virtue of receiving Securities under the Transaction Documents
or under any other agreement between the Company and the
Purchasers.

       

           4.6 Non-Public
Information. Except with respect to the material terms and conditions of
the transactions contemplated by the Transaction Documents, the Company
covenants and agrees that it will not provide any Purchaser or its agents or
counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto such Purchaser shall have executed
a written agreement regarding the confidentiality and use of such information.
The Company understands and confirms that each Purchaser shall be relying on the
foregoing covenant in effecting transactions in securities of the
Company.

       

           4.7 Use of Proceeds.
Except as set forth on Schedule 4.7 attached
hereto, the Company shall use the net proceeds from the sale of the Securities
hereunder for working capital purposes and shall not use such proceeds for
(a) the satisfaction of any portion of the Company’s debt (other than
payment of trade payables in the ordinary course of the Company’s business and
prior practices), (b) the redemption of any Common Stock or Common Stock
Equivalents or (c) the settlement of any outstanding
litigation.

       

      
        
          
          

        

        
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           4.8 Indemnification of
Purchasers. Subject to the provisions of this Section 4.8, the
Company will indemnify and hold each Purchaser and its directors, officers,
shareholders, members, partners, employees and agents (and any other Persons
with a functionally equivalent role of a Person holding such titles
notwithstanding a lack of such title or any other title), each Person who
controls such Purchaser (within the meaning of Section 15 of the Securities
Act and Section 20 of the Exchange Act), and the directors, officers,
shareholders, agents, members, partners or employees (and any other Persons with
a functionally equivalent role of a Person holding such titles notwithstanding a
lack of such title or any other title) of such controlling persons (each, a
“Purchaser
Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys’ fees and
costs of investigation that any such Purchaser
Party may suffer or incur as a result of or relating to (a) any breach of
any of the representations, warranties, covenants or agreements made by the
Company in this Agreement or in the other Transaction Documents or (b) any
action instituted against a Purchaser in any capacity, or any of them or their
respective Affiliates, by any stockholder of the Company who is not an Affiliate
of such Purchaser, with respect to any of the transactions contemplated by the
Transaction Documents (unless such action is based upon a breach of such
Purchaser’s representations, warranties or covenants under the Transaction
Documents or any agreements or understandings such Purchaser may have with any
such stockholder or any violations by the Purchaser of state or federal
securities laws or any conduct by such Purchaser which constitutes fraud, gross
negligence, willful misconduct or malfeasance). If any action shall be brought
against any Purchaser Party in respect of which indemnity may be sought pursuant
to this Agreement, such Purchaser Party shall promptly notify the Company in
writing, and the Company shall have the right to assume the defense thereof with
counsel of its own choosing reasonably acceptable to the Purchaser Party. Any
Purchaser Party shall have the right to employ separate counsel in any such
action and participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of such Purchaser Party except to the extent
that (i) the employment thereof has been specifically authorized by the
Company in writing, (ii) the Company has failed after a reasonable period
of time to assume such defense and to employ counsel or (iii) in such
action there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company and the
position of such Purchaser Party, in which case the Company shall be responsible
for the reasonable fees and expenses of no more than one such separate counsel.
The Company will not be liable to any Purchaser Party under this Agreement (i)
for any settlement by a Purchaser Party effected without the Company’s prior
written consent, which shall not be unreasonably withheld or delayed; or
(ii) to the extent, but only to the extent that a loss, claim, damage or
liability is attributable to any Purchaser Party’s breach of any of the
representations, warranties, covenants or agreements made by such Purchaser
Party in this Agreement or in the other Transaction Documents.

       

           4.9 Reservation of Common
Stock. As of the date hereof, the Company has reserved and the Company
shall continue to reserve and keep available at all times, free of preemptive
rights, a sufficient number of shares of Common Stock for the purpose of
enabling the Company to issue Shares pursuant to this Agreement and Warrant
Shares pursuant to any exercise of the Warrants.

       

           4.10 Listing of Common
Stock.(a) The Company hereby agrees to maintain the listing of the Common
Stock on a Trading Market, and as soon as reasonably practicable following the
Closing (but not later than the earlier of the Effective Date and the first
anniversary of the Closing Date) to list all of the Shares and Warrant Shares on
such Trading Market. The Company further agrees, if the Company applies to have
the Common Stock traded on any other Trading Market, it will include in such
application all of the Shares and Warrant Shares, and will take such other
action as is necessary to cause all of the Shares and Warrant Shares to be
listed on such other Trading Market as promptly as possible. The Company will
take all action reasonably necessary to continue the listing and trading of its
Common Stock on a Trading Market and will comply in all respects with the
Company’s reporting, filing and other obligations under the bylaws or rules of
the Trading Market.

       

      
        
          
          

        

        
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           4.11 Equal Treatment of
Purchasers. No consideration shall be offered or paid to any Person to
amend or consent to a waiver or modification of any provision of any of the
Transaction Documents unless the same consideration is also offered to all of
the parties to the Transaction Documents. For clarification purposes, this
provision constitutes a separate right granted to each Purchaser by the Company
and negotiated separately by each Purchaser, and is intended for the Company to
treat the Purchasers as a class and shall not in any way be construed as the
Purchasers acting in concert or as a group with respect to the purchase,
disposition or voting of Securities or otherwise. The provisions of this section
4.11 notwithstanding, nothing in this agreement shall prohibit the Company from
negotiating and entering into separate settlements with any Purchaser in the
event of litigation arising out of the transactions contemplated by the
Transaction Documents without triggering the obligation to make a similar
payment to any other Purchaser.

       

           4.12 Participation in Future
Financing.

       

           (a)
From the date hereof until the date that is the 24 month anniversary of the
Effective Date, upon any issuance by the Company or any of its Subsidiaries of
Common Stock or Common Stock Equivalents for cash consideration (a “Subsequent
Financing”), each Purchaser shall have the right to participate in the
Subsequent Financing up to an amount equal to 25% of the Subsequent Financing
(the “Participation
Maximum”) on the same terms, conditions and price provided for in the
Subsequent Financing.

       

           (b)
At least 5 Trading Days prior to the closing of the Subsequent Financing, the
Company shall deliver to each Purchaser a written notice of its intention to
effect a Subsequent Financing (“Pre-Notice”), which
Pre-Notice shall ask such Purchaser if it wants to review the details of such
financing (such additional notice, a “Subsequent Financing
Notice”). Upon the request of a Purchaser, and only upon a request by
such Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
but no later than 1 Trading Day after such request, deliver a Subsequent
Financing Notice to such Purchaser. The Subsequent Financing Notice shall
describe in reasonable detail the proposed terms of such Subsequent Financing,
the amount of proceeds intended to be raised thereunder and the Person or
Persons through or with whom such Subsequent Financing is proposed to be
effected and shall include a term sheet or similar document relating thereto as
an attachment.

       

           (c)
Any Purchaser desiring to participate in such Subsequent Financing must provide
written notice to the Company by not later than 5:30 p.m. (New York City time)
on the 5th Trading
Day after all of the Purchasers have received the Pre-Notice that the Purchaser
is willing to participate in the Subsequent Financing, the amount of the
Purchaser’s participation, and that the Purchaser has such funds ready, willing,
and available for investment on the terms set forth in the Subsequent Financing
Notice. If the Company receives no notice from a Purchaser as of such 5th Trading
Day, such Purchaser shall be deemed to have notified the Company that it does
not elect to participate.

       

           (d)
If by 5:30 p.m. (New York City time) on the 5th Trading
Day after all of the Purchasers have received the Pre-Notice, notifications by
the Purchasers of their willingness to participate in the Subsequent Financing
is, in the aggregate, less than the total
amount of the Subsequent Financing, then the Company may effect the remaining
portion of such Subsequent Financing on the terms and with the Persons set forth
in the Subsequent Financing Notice.

       

      
        
          
          

        

        
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           (e)
If by 5:30 p.m. (New York City time) on the 5th Trading
Day after all of the Purchasers have received the Pre-Notice, the Company
receives responses to a Subsequent Financing Notice from Purchasers seeking to
purchase more than the aggregate amount of the Participation Maximum, each such
Purchaser shall have the right to purchase its Pro Rata Portion (as defined
below) of the Participation Maximum. “Pro Rata Portion”
means the ratio of (x) the Subscription Amount of Securities purchased on
the Closing Date by a Purchaser participating under this Section 4.12 and
(y) the sum of the aggregate Subscription Amounts of Securities purchased
on the Closing Date by all Purchasers participating under this
Section 4.12.

       

           (f)
The Company must provide the Purchasers with a second Subsequent Financing
Notice, and the Purchasers will again have the right of participation set forth
above in this Section 4.12, if the Subsequent Financing subject to the
initial Subsequent Financing Notice is not consummated for any reason on the
terms set forth in such Subsequent Financing Notice within 60 Trading Days after
the date of the initial Subsequent Financing Notice.

       

           (g)
Notwithstanding the foregoing, this Section 4.12 shall not apply in respect
of (i) an Exempt Issuance or (ii) an underwritten public offering of Common
Stock.

       

           4.13 Subsequent Equity
Sales.

       

           (a) From
the date hereof until 90 days after the Effective Date, neither the Company
nor any Subsidiary shall issue shares of Common Stock or Common Stock
Equivalents other than Exempt Issuances; provided, however, the
90 day period set forth in this Section 4.13 shall be extended for the
number of Trading Days during such period in which (i) trading in the
Common Stock is suspended by any Trading Market, or (ii) following the Effective
Date, the Registration Statement is not effective or the prospectus included in
the Registration Statement may not be used by the Purchasers for the resale of
the Shares and Warrant Shares.

       

           (b) From
the date hereof until such time as no Purchaser holds any of the Securities, the
Company shall be prohibited from effecting or entering into an agreement to
effect any Subsequent Financing involving a Variable Rate Transaction. “Variable Rate
Transaction” means a transaction in which the Company issues or sells
(i) any debt or equity securities that are convertible into, exchangeable
or exercisable for, or include the right to receive additional shares of Common
Stock either (A) at a conversion, exercise or exchange rate or other price
that is based upon and/or varies with the trading prices of or quotations for
the shares of Common Stock at any time after the initial issuance of such debt
or equity securities, or (B) with a conversion, exercise or exchange price
that is subject to being reset at some future date after the initial issuance of
such debt or equity security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the
market for the Common Stock or
(ii) enters into any agreement, including, but not limited to, an equity
line of credit, whereby the Company may sell securities at a future determined
price. Any Purchaser shall be entitled to obtain injunctive relief against the
Company to preclude any such issuance, which remedy shall be in addition to any
right to collect damages.

       

      
        
          
          

        

        
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           (c) Unless
Shareholder Approval has been obtained and deemed effective, neither the Company
nor any Subsidiary shall make any issuance whatsoever of Common Stock or Common
Stock Equivalents which would cause any adjustment of the Exercise Price to the
extent the holders of Warrants would not be permitted, pursuant to Section 2(d)
of the Warrants, to exercise their respective Warrants in full, ignoring for
such purposes the exercise limitations therein. Any Purchaser shall be entitled
to obtain injunctive relief against the Company to preclude any such issuance,
which remedy shall be in addition to any right to collect damages

       

           (d) Notwithstanding
the foregoing, this Section 4.13 shall not apply in respect of an Exempt
Issuance, except that no Variable Rate Transaction shall be an Exempt
Issuance.

       

           4.14 Short Sales and
Confidentiality After The Date Hereof. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that neither it nor any Affiliate
acting on its behalf or pursuant to any understanding with it will execute any
Short Sales during the period commencing at the Discussion Time and ending at
the time that the transactions contemplated by this Agreement are first publicly
announced as described in Section 4.4. Each Purchaser, severally and not
jointly with the other Purchasers, covenants that until such time as the
transactions contemplated by this Agreement are publicly disclosed by the
Company as described in Section 4.4, such Purchaser will maintain the
confidentiality of the existence and terms of this transaction and the
information included in the Disclosure Schedules. Each Purchaser severally and
not jointly with any other Purchaser, understands and acknowledges, and agrees,
to act in a manner that will not violate the positions of the Commission as set
forth in Item 65, Section A, of the Manual of Publicly Available
Telephone Interpretations, dated July 1997, compiled by the Office of Chief
Counsel, Division of Corporation Finance. Notwithstanding
the foregoing, no Purchaser makes any representation, warranty or covenant
hereby that it will not engage in Short Sales in the securities of the Company
after the time that the transactions contemplated by this Agreement are first
publicly announced as described in Section 4.4. Notwithstanding the
foregoing, in the case of a Purchaser that is a multi-managed investment vehicle
whereby separate portfolio managers manage separate portions of such Purchaser’s
assets and the portfolio managers have no direct knowledge of the investment
decisions made by the portfolio managers managing other portions of such
Purchaser’s assets, the covenant set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the
investment decision to purchase the Securities covered by this
Agreement.

       

           4.15 Delivery of Securities After
Closing. The Company shall deliver, or cause to be delivered, the
respective Securities purchased by each Purchaser to such Purchaser within 3
Trading Days of the Closing Date.

       

           4.16 Form D; Blue Sky
Filings. The Company agrees to timely file a Form D with respect to
the Securities as required under Regulation D and to provide a copy
thereof, promptly upon request of any Purchaser. The Company shall take such
action as the Company shall reasonably determine is necessary in order to obtain
an exemption for, or to qualify the Securities for, sale to the Purchasers at
the Closing under applicable securities or “Blue Sky” laws of the states of the
United States, and shall provide evidence of such actions promptly upon request
of any Purchaser.

       

           4.17 Capital Changes.
[Until the one year anniversary of the Effective Date, the Company shall not
undertake a reverse or forward stock split or reclassification of the Common
Stock
without the prior written consent of the Purchasers holding a majority in
interest of the Shares.

       

      
        
          
          

        

        
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      ARTICLE
V.

      MISCELLANEOUS

       

           5.1 Termination. This
Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations
hereunder only and without any effect whatsoever on the obligations between the
Company and the other Purchasers, by written notice to the other parties, if the
Closing has not been consummated on or before August 8, 2007; provided, however, that no such
termination will affect the right of any party to sue for any breach by the
other party (or parties).

       

           5.2 Fees and Expenses.
Except as expressly set forth in the Transaction Documents to the contrary, each
party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to
the negotiation, preparation, execution, delivery and performance of this
Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other
taxes and duties levied in connection with the delivery of any Securities to the
Purchasers.

       

           5.3 Entire Agreement. The
Transaction Documents, together with the exhibits and schedules thereto, contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements and understandings, oral or written,
with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.

       

           5.4 Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (a) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number set forth on
the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a
Trading Day, (b) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto on a day that is not a Trading
Day or later than 5:30 p.m. (New York City time) on any Trading Day,
(c) the 2nd Trading
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom
such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.

       

           5.5 Amendments; Waivers.
No provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by the Company and the
Purchasers of at least 67% of the Shares still held by the Purchasers or, in the
case of a waiver, by the party against whom enforcement of any such waived
provision is sought. No waiver of any default with respect to any provision,
condition or requirement of this Agreement shall be deemed to be a continuing
waiver in the future or a waiver of any subsequent default or a waiver of any
other provision, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right.

       

      
        
          
          

        

        
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           5.6 Headings. The
headings herein are for convenience only, do not constitute a part of this
Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

       

           5.7 Successors and
Assigns. This Agreement shall be binding upon and inure to the benefit of
the parties and their successors and permitted assigns. The Company may not
assign this Agreement or any rights or obligations hereunder without the prior
written consent of each Purchaser (other than by merger). Any Purchaser may
assign any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the
“Purchasers.”

       

           5.8 No Third-Party
Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person,
except as otherwise set forth in Section 4.8.

       

           5.9 Governing Law. All
questions concerning the construction, validity, enforcement and interpretation
of the Transaction Documents shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to
the principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of the
transactions contemplated by this Agreement and any other Transaction Documents
(whether brought against a party hereto or its respective affiliates, directors,
officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein (including with respect to
the enforcement of any of the Transaction Documents), and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is improper or is an inconvenient venue for such
proceeding. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other
manner permitted by law. If either party shall commence an action or proceeding
to enforce any provisions of the Transaction Documents, then the prevailing
party in such action or proceeding shall be reimbursed by the other party for
its reasonable attorneys’ fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or
proceeding.

       

           5.10 Survival. The
representations and warranties contained herein shall survive the Closing and
the delivery of the Shares and Warrant Shares.

       

      
        
          
          

        

        
          30

          
            

          

        

        
          
          

        

         

      

           5.11 Execution. This
Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective
when counterparts have been signed by each party and delivered to the other
party, it being understood that both parties need not sign the same counterpart.
In the event that any signature is delivered by facsimile transmission or by
e-mail delivery of a “.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
“.pdf” signature page were an original thereof.

       

           5.12 Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

       

           5.13 Rescission and Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without
limiting any similar provisions of) any of the other Transaction Documents,
whenever any Purchaser exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related
obligations within the periods therein provided, then such Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the
Company, any relevant notice, demand or election in whole or in part without
prejudice to its future actions and rights; provided, however, in the case
of a rescission of an exercise of a Warrant, the Purchaser shall be required to
return any shares of Common Stock delivered in connection with any such
rescinded exercise notice.

       

           5.14 Replacement of
Securities. If any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be
issued in exchange and substitution for and upon cancellation thereof (in the
case of mutilation), or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction. The applicant for a new certificate
or instrument under such circumstances shall also pay any reasonable third-party
costs (including customary indemnity) associated with the issuance of such
replacement Securities.

       

           5.15 Remedies. In addition
to being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each of the Purchasers and the Company will be
entitled to specific performance under the Transaction Documents. The parties
agree that monetary damages may not be adequate compensation for any loss
incurred by reason of any breach of obligations contained in the Transaction
Documents and hereby agrees to waive and not to assert in any action for
specific performance of any such obligation the defense that a remedy at law
would be adequate.

       

      
        
          
          

        

        
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           5.16 Payment Set Aside. To
the extent that the Company makes a payment or payments to any Purchaser
pursuant to any Transaction Document or a Purchaser enforces or exercises its
rights thereunder, and such payment or payments or the proceeds of such
enforcement
or exercise or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, recovered from, disgorged by or are
required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other person under any law (including, without limitation, any
bankruptcy law, state or federal law, common law or equitable cause of action),
then to the extent of any such restoration the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.

       

           5.17 Independent Nature of
Purchasers’ Obligations and Rights. The obligations of each Purchaser
under any Transaction Document are several and not joint with the obligations of
any other Purchaser, and no Purchaser shall be responsible in any way for the
performance or non-performance of the obligations of any other Purchaser under
any Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Purchaser pursuant thereto, shall be deemed
to constitute the Purchasers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Purchasers are in
any way acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Documents. Each Purchaser shall be
entitled to independently protect and enforce its rights, including without
limitation, the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose. Each
Purchaser has been represented by its own separate legal counsel in their review
and negotiation of the Transaction Documents. For reasons of administrative
convenience only, Purchasers and their respective counsel have chosen to
communicate with the Company through FWS. FWS does not represent the Purchasers
but only the Placement Agent. The Company has elected to provide all Purchasers
with the same terms and Transaction Documents for the convenience of the Company
and not because it was required or requested to do so by the
Purchasers.

       

           5.18 Liquidated Damages.
The Company’s obligations to pay any partial liquidated damages or other amounts
owing under the Transaction Documents is a continuing obligation of the Company
and shall not terminate until all unpaid partial liquidated damages and other
amounts have been paid notwithstanding the fact that the instrument or security
pursuant to which such partial liquidated damages or other amounts are due and
payable shall have been canceled.

       

           5.19 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.

       

           5.20 Construction. The
parties agree that each of them and/or their respective counsel has reviewed and
had an opportunity to revise the Transaction Documents and, therefore, the
normal rule of construction to the effect that any ambiguities are to be
resolved against the drafting party shall not be employed in the interpretation
of the Transaction Documents or any amendments hereto.

       

      
        
          
          

        

        
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           5.21 Waiver of Jury Trial.
In any action, suit or proceeding in any jurisdiction brought by any party
against any other party, the parties each knowingly and intentionally, to the
greatest extent
permitted by applicable law, hereby absolutely, unconditionally, irrevocably and
expressly waives forever trial by jury.

       

      (Signature
Pages Follow)

       

      
        
          
          

        

        
          33

          
            

          

        

        
          
          

        

      

       

                IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

       

      
        	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                OCULUS
      INNOVATIVE SCIENCES, INC.

              	 
      	 
      	 
      	
                Address for
      Notice:

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                By:

              	 
      	
                /s/
      Jim Schutz

              	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                Name:
      Jim Schutz

                Title:
      General Counsel

              	 
      	 
      	 
      	
                Fax:

              
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                With
      a copy to (which shall not constitute notice):

              	 
      	 
      

      

       

      [REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK

      SIGNATURE
PAGE FOR PURCHASER FOLLOWS]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Aristeia International Limited

      

      Signature of Authorized Signatory of
Purchaser: /s/Chong Park

      

      Name of
Authorized Signatory: Chong Park

      

      Title of
Authorized Signatory: Portfolio Manager

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        	
                Address
      for Notice of Purchaser:

              	
                Aristeia
      International Limited

              

      

      136 Madison Avenue

      3rd
Floor

      New York, NY 10016

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $676,600

      

      Shares: 84,575

      

      Warrant
Shares: 27,909

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Aristeia Partners, L.P.

      

      Signature of Authorized Signatory of
Purchaser: /s/Chong Park

      

      Name of
Authorized Signatory: Chong Park

      

      Title of
Authorized Signatory: Portfolio Manager

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        	
                Address
      for Notice of Purchaser:

              	
                Aristeia
      Partners, L.P.

              

      

      136 Madison Avenue

      3rd
Floor

      New York, NY 10016

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $84,096

      

      Shares: 10,512

      

      Warrant
Shares: 3,468

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Aristeia Special Investments Master, L.P.

      

      Signature of Authorized Signatory of
Purchaser: /s/Chong Park

      

      Name of
Authorized Signatory: Chong Park

      

      Title of
Authorized Signatory: Portfolio Manager

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        	
                Address
      for Notice of Purchaser:

              	
                Aristeia
      Special Investments Master, L.P.

              

      

      136 Madison Avenue

      3rd
Floor

      New York, NY 10016

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $239,304

      

      Shares: 29,913

      

      Warrant
Shares: 9,871

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Avendis Absolute Alternative 1 Trading Ltd

      

      Signature of Authorized Signatory of
Purchaser: /s/Yannis Bilquez

      

      Name of
Authorized Signatory: Yannis Bilquez

      

      Title of
Authorized Signatory: Director

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      
        

        
          	
                  Address
      for Notice of Purchaser:

                	
                  Lehman
      Brothers International Europe

                

        

      

      25 Bank Street

      London E14 5LE

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $280,000

      

      Shares: 35,000

      

      Warrant
Shares: 11,550

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Cranshire Capital, L.P.

      

      Signature of Authorized Signatory of
Purchaser: /s/Lawrence A. Prosser

      

      Name of
Authorized Signatory: Lawrence A. Prosser

      

      Title of
Authorized Signatory: CFO - Downsview Capital, Inc. The General
Partner

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Cranshire
      Capital, L.P.

                

        

      

      3100 Dundee Road, Suite
703

      Northbrook, IL 60062

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $500,000

      

      Shares: 62,500

      

      Warrant
Shares: 20,625

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Crescent International, Ltd.

      

      Signature of Authorized Signatory of
Purchaser: /s/Maxi Brezzi

      

      Name of
Authorized Signatory: Maxi Brezzi

      

      Title of
Authorized Signatory: 

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Crescent
      International, Ltd.

                

        

        c/o
Cantara (Switzerland) SA

      

      84, Avenue Louis-Casai

      CH-1216 Cointrin/Geneva,
Switzerland

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $308,000

      

      Shares: 38,500

      

      Warrant
Shares: 12,705

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Diamond Opportunity Fund, LLC

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard Marks

      

      Name of
Authorized Signatory: Richard Marks

      

      Title of
Authorized Signatory: Managing Director

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Diamond
      Opportunity Fund, LLC

                

        

      

      500 Skokie Boulevard, Suite
300

      Northbrook, IL 60062

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $350,000

      

      Shares: 43,750

      

      Warrant
Shares: 14,437

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Double U Master Fund LP

      

      Signature of Authorized Signatory of
Purchaser: /s/Sheldon Traube

      

      Name of
Authorized Signatory: Sheldon Traube

      

      Title of
Authorized Signatory: 

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Double
      U Master Fund LP

                

        

      

      2nd Floor,
Harbour House, Waterfront Drive

      Road Town, Tortola

      British Virgin Islands

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $100,000

      

      Shares: 12,500

      

      Warrant
Shares: 4,125

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Egatniv, LLC

      

      Signature of Authorized Signatory of
Purchaser: /s/Seth Farbman

      

      Name of
Authorized Signatory: Seth Farbman

      

      Title of
Authorized Signatory: Member

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Egatniv,
      LLC

                

        

      

      150 West 46th St.,
6th
floor

      New York, NY 10036

      Attn: Josh Greenberg

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $100,000

      

      Shares: 12,500

      

      Warrant
Shares: 4,125

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Graham Anderson

      

      Signature of Authorized Signatory of
Purchaser: /a/Graham Anderson

      

      Name of
Authorized Signatory: Graham Anderson

      

      Title of
Authorized Signatory: 

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  71
      Hickory Lane

                

        

      

      Bedford, NY 10506

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $100,000

      

      Shares: 12,500

      

      Warrant
Shares: 4,125

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Franklin Biotechnology Discovery Fund

      

      Signature of Authorized Signatory of
Purchaser: /s/Evan McCulloch

      

      Name of
Authorized Signatory: Evan McCulloch

      

      Title of
Authorized Signatory: Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  One
      Franklin Parkway

                

        

      

      San Mateo, CA 94403

      

      
        	
                Address

              	
                Attn:
      Arnold Mussela

              

      

      Bank of New York

      One Wall Street, 3rd
Floor

      New York, NY 10268

      

      Subscription
Amount: $2,000,000

      

      Shares: 250,000

      

      Warrant
Shares: 82,500

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Highbridge International, LLC

      

      Signature of Authorized Signatory of
Purchaser: /s/Scott Wallace

      

      Name of
Authorized Signatory: Scott Wallace

      

      Title of
Authorized Signatory: Senior Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Highbridge
      Capital Management, LLC

                

        

      

      9 West 57th Street,
27th
Floor

      New York, NY 10019

      Attn: Ari J Storch / Adam J
Chill

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Bear
      Stearns

                

        

      

      1 Metrotech Center, 20th
Floor

      Brooklyn, NY 11201

      Attn: Elanna Bradley

      

      Subscription
Amount: $500,000

      

      Shares: 62,500

      

      Warrant
Shares: 20,625

      

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           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Iroquois Master Fund, Ltd.

      

      Signature of Authorized Signatory of
Purchaser: /s/Joshua Silverman

      

      Name of
Authorized Signatory: Joshua Silverman

      

      Title of
Authorized Signatory: 

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  641
      Lexington Ave., 26th
      Fl.

                

        

      

      New York, NY 10022

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $300,000

      

      Shares: 37,500

      

      Warrant
Shares: 12,375

      

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           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Lincoln Biotech Ventures II, L.P.

      

      Signature of Authorized Signatory of
Purchaser: /s/Robert Carver

      

      Name of
Authorized Signatory: Robert Carver

      

      Title of
Authorized Signatory: Secretary, Lincoln Funds International

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Lincoln
      Biotech Ventures, L.P.

                

        

        695 Town
Center Dr.

      

      8th
Floor

      Costa Mesa, CA 92626

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $100,000

      

      Shares: 12,500

      

      Warrant
Shares: 4,125

      

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           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Otago Partners, LLC

      

      Signature of Authorized Signatory of
Purchaser: /s/Lindsay A. Rosenwald, MD

      

      Name of
Authorized Signatory: Lindsay A. Rosenwald, MD

      

      Title of
Authorized Signatory: Managing Member

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Otago
      Partners, LLC

                

        

      

      787 7th Ave,
48th
Fl.

      New York, NY 10019

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $100,000

      

      Shares: 12,500

      

      Warrant
Shares: 4,125

      

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           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Perceptive Life Sciences Master Fund LTD

      

      Signature of Authorized Signatory of
Purchaser: /s/Joe Edelman

      

      Name of
Authorized Signatory: Joe Edelman

      

      Title of
Authorized Signatory: Managing Member

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Perceptive
      Advisors

                

        

      

      499 Park Avenue

      25th
Floor

      New York, NY 10022

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $1,400,000

      

      Shares: 175,000

      

      Warrant
Shares: 57,750

      

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      [PURCHASER
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           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Catalytix LDC Life Science Hedge AC

      

      Signature of Authorized Signatory of
Purchaser: /s/Ted Kalem

      

      Name of
Authorized Signatory: Ted Kalem

      

      Title of
Authorized Signatory: Partner

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Catalytix
      LOC Life Science Hedge AC

                

        

      

      CIBe Bank and Trust Company (Cayman)
Limited

      GIBC Financial Centre, 11 Dr. Roy’s
Drive

      P.O. Box 694 GT

      Grand Cayman

      Cayman Islands

      B.W.I.

      Attn: Martin Laidlaw

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Theodore
      E Kalem

                

Array Capital Management,
LLC

      

      425 Fifth Avenue, Suite
28D

      New York, NY 10016

      

      Subscription
Amount: $100,000

      

      Shares: 12,500

      

      Warrant
Shares: 4,125

      

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           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Rockmore Investment Master Fund, Ltd

      

      Signature of Authorized Signatory of
Purchaser: /s/Brian Daly

      

      Name of
Authorized Signatory: Brian Daly

      

      Title of
Authorized Signatory: Director

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  c/o
      Rockmore Capital LLC

                

        

      

      150 E. 58th St.,
28th
Fl.

      New York, NY 10155

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Rockmore
      Investment Master Fund, LLC

                

        

        Meridian
Fund Services Limited

      

      P.O. Box HM528

      73 Front Street

      Hamilton HM CX

      Bermuda

      

      Subscription
Amount: $350,000

      

      Shares: 43,750

      

      Warrant
Shares: 14,437

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: RRC Biofund, LP

      

      Signature of Authorized Signatory of
Purchaser: /s/Jim Silverman

      

      Name of
Authorized Signatory: Jim Silverman

      

      Title of
Authorized Signatory: Managing Director

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  124
      Mr. Auburn St., Suite 200N

                

        

      

      Cambridge, MA 02138

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $840,000

      

      Shares: 105,000

      

      Warrant
Shares: 34,650

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Whalehaven Capital Fund Limited

      

      Signature of Authorized Signatory of
Purchaser: /s/Brian Mazzella

      

      Name of
Authorized Signatory: Brian Mazzella

      

      Title of
Authorized Signatory: CFO

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Whalehaven
      Capital Fund Limited

                

        

      

      160 Summit Avenue

      Montvale, NJ 07645

      

      Address
for Delivery of Securities for Purchaser (if not same as address for
notice):

      

      Subscription
Amount: $500,000

      

      Shares: 62,500

      

      Warrant
Shares: 20,625

      

      EIN
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Daniel B. and Linda O. Ahlberg Trustees FBO Ahlberg Joint
Revocable Trust u/a dtd 8/27/06

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Daniel
      B. Ahlberg

                

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

Corp & Venture
Services

      

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $36,000

      

      Shares: 4,500

      

      Warrant
Shares: 1,485

      

      EIN
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Alice Ann Corporation

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Alice
      Ann Corporation

                

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

Corp & Venture
Services

      

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $56,000

      

      Shares: 7,000

      

      Warrant
Shares: 2,310

      

      EIN
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           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Robert G. Allison

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Robert
      G. Allison

                

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

Corp & Venture
Services

      

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $80,000

      

      Shares: 10,000

      

      Warrant
Shares: 3,300

      

      EIN
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      [PURCHASER
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           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: William H. Baxter Trustee FBO William H. Baxter Revokable Trust
u/a dtd 7/3/96

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  William
      H. Baxter

                

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

Corp & Venture
Services

      

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $32,000

      

      Shares: 4,000

      

      Warrant
Shares: 1,320

      

      EIN
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Piper Jaffray as Custodian FBO William H. Baxter
IRA

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  William
      H. Baxter

                

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

Corp & Venture
Services

      

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $28,000

      

      Shares: 3,500

      

      Warrant
Shares: 1,155

      

      EIN
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: David & Carole Brown Trustees FBO David & Carole Brown
Revocable Trust u/a dtd 10/23/97

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  David
      & Carole Brown

                

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

Corp & Venture
Services

      

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $40,000

      

      Shares: 5,000

      

      Warrant
Shares: 1,650

      

      EIN
Number: [PROVIDE THIS
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Piper Jaffray as Custodian FBO Robert H. Clayburgh
IRA

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Robert
      H. Clayburgh

                

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

Corp & Venture
Services

      

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $52,000

      

      Shares: 6,500

      

      Warrant
Shares: 2,145

      

      EIN
Number: [PROVIDE THIS
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Gary & Leslie Clipper JTWROS

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          	
                  Address
      for Notice of Purchaser:

                	
                  Gary
      & Leslie Clipper

                

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

Corp & Venture
Services

      

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $24,000

      

      Shares: 3,000

      

      Warrant
Shares: 990

      

      EIN
Number: [PROVIDE THIS
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Piper Jaffray as Custodian FBO Mark Donahoe IRA

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Mark
      Donahoe

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          
            	
                    Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                  	
                    Piper
      Jaffray

                  

          

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $64,000

      

      Shares: 8,000

      

      Warrant
Shares: 2,640

      

      EIN
Number: [PROVIDE THIS
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Dennis D. Gonyea

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Dennis
      D. Gonyea

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          
            	
                    Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                  	
                    Piper
      Jaffray

                  

          

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $40,000

      

      Shares: 5,000

      

      Warrant
Shares: 1,650

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Richard A. Hoel

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Richard
      A. Hoel

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $24,000

      

      Shares: 3,000

      

      Warrant
Shares: 990

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Elizabeth J. Kuehne

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Elizabeth
      J. Kuehne

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $40,000

      

      Shares: 5,000

      

      Warrant
Shares: 1,650

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Piper Jaffray as Custodian FBO Elizabeth J. Kuehne
IRA

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Elizabeth
      J. Kuehne

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $28,000

      

      Shares: 3,500

      

      Warrant
Shares: 1,155

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Piper Jaffray as Custodian FBO Michael E. McElligott
SPN/PRO

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Michael
      E. McElligott

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $28,000

      

      Shares: 3,500

      

      Warrant
Shares: 1,155

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Piper Jaffray as Custodian FBO Charles W. Pappas
IRA

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Charles
      W. Pappas

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $36,000

      

      Shares: 4,500

      

      Warrant
Shares: 1,485

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: John T. Potter

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    John
      T. Potter

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $48,000

      

      Shares: 6,000

      

      Warrant
Shares: 1,980

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Carolyn Salon

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Carolyn
      Salon

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $32,000

      

      Shares: 4,000

      

      Warrant
Shares: 1,320

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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PAGES CONTINUE]

       

      
        
          
          

        

        
          71

          
            

          

        

        
          
          

        

      

       

      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Joel A. Salon

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Joel
      A. Salon

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $28,000

      

      Shares: 3,500

      

      Warrant
Shares: 1,155

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Paul C. Seel & Nancy S. Seel JTWROS

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Paul
      C. Seel & Nancy S.
Seel

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $40,000

      

      Shares: 5,000

      

      Warrant
Shares: 1,650

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: E. Terry Skone, TTE FBO E. Terry Skone Revocable Trust U/A dtd
11/30/05

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    E.
      Terry Skone

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $48,000

      

      Shares: 6,000

      

      Warrant
Shares: 1,980

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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PAGES CONTINUE]

       

      
        
          
          

        

        
          74

          
            

          

        

        
          
          

        

      

       

      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Donald O. & Janet M. Voight TTEE’s FBO Janet M. Voight Trust
U/A dtd 9/29/96

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Janet
      M. Voight

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $40,000

      

      Shares: 5,000

      

      Warrant
Shares: 1,650

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
          75

          
            

          

        

        
          
          

        

      

       

      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Piper Jaffray as Custodian FBO James B. Wallace
SPN/PRO

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    James
      B. Wallace

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $48,000

      

      Shares: 6,000

      

      Warrant
Shares: 1,980

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: David M. Wertrum TTEE, FBO David M. Westrum Revocable Living
Trust u/a dtd 6/1/97

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    David
      M. Westrum

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $40,000

      

      Shares: 5,000

      

      Warrant
Shares: 1,650

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

      [SIGNATURE
PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Piper Jaffray as Custodian FBO Michael R. Wilcox
IRA

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Michael
      R. Wilcox

                  

          

        

      

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $40,000

      

      Shares: 5,000

      

      Warrant
Shares: 1,650

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

      

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PAGES CONTINUE]

       

      
        
          
          

        

        
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      [PURCHASER
SIGNATURE PAGES TO OCLS SECURITIES PURCHASE AGREEMENT]

       

           IN
WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement
to be duly executed by their respective authorized signatories as of the date
first indicated above.

       

      Name of
Purchaser: Pyramid Partners, L.P.

      

      Signature of Authorized Signatory of
Purchaser: /s/Richard C. Perkins

      

      Name of
Authorized Signatory: Richard C. Perkins

      

      Title of
Authorized Signatory: Executive Vice President

      

      Email
Address of Purchaser: 

      

      Fax
Number of Purchaser: 

      

      
        
          
            	
                    Address
      for Notice of Purchaser:

                  	
                    Richard
      W. Perkins

                  

          

        

      

      Pyramid
Partners, L.P.

      c/o Perkins Capital Management,
Inc.

      730 East Lake Street

      Wayzata, MN 55391

      

      
        
          	
                  Address
      for Delivery of Securities for Purchaser (if not same as address for
      notice):

                	
                  Piper
      Jaffray

                

        

      

      Corp & Venture
Services

      Ms. Kristi Kling

      800 Nicollet Mall, J12S06

      Minneapolis,
MN 55402

      

      Subscription
Amount: $200,000

      

      Shares: 25,000

      

      Warrant
Shares: 8,250

      

      EIN
Number: [PROVIDE THIS
UNDER SEPARATE COVER]

       

       

      
        
          
          

        

        
          79Exhibit 10.27

     

    REGISTRATION
RIGHTS AGREEMENT

     

     
   This Registration Rights Agreement (this “Agreement”) is made
and entered into as of August 7, 2007, between Oculus Innovative Sciences,
Inc., a Delaware corporation (the “Company”) and each of
the several purchasers signatory hereto (each such purchaser, a “Purchaser” and,
collectively, the “Purchasers”).

     

     
        This Agreement is made pursuant to the Securities
Purchase Agreement, dated as of the date hereof, between the Company and each
Purchaser (the “Purchase
Agreement”).

     

     
        The Company and each Purchaser hereby agrees as
follows:

     

     
   1. Definitions

     

     
        Capitalized terms used and not
otherwise defined herein that are defined in the Purchase Agreement shall have
the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

     

     
   “Advice” shall have
the meaning set forth in Section 6(d).

     

     
   “Effectiveness Date”
means, with respect to the Initial Registration Statement required to be filed
hereunder, the 90th calendar
day following the date hereof (or, in the event of a “full review” by the
Commission, the 120th calendar day following the date hereof) and with respect
to any additional Registration Statements which may be required pursuant to
Section 3(c), the 90th calendar day following the date on which an
additional Registration Statement is required to be filed hereunder; provided, however, that in the
event the Company is notified by the Commission that one or more of the above
Registration Statements will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Date as to such Registration Statement
shall be the fifth Trading Day following the date on which the Company is so
notified if such date precedes the dates otherwise required above.

     

     
   “Effectiveness Period”
shall have the meaning set forth in Section 2(a).

     

     
   “Event” shall have the
meaning set forth in Section 2(b).

     

     
   “Event
Date” shall have the meaning set forth in Section 2(b).

     

     
   “Filing
Date” means, with respect to the Initial Registration Statement required
hereunder, the 30th calendar
day following the date hereof and, with respect to any additional Registration
Statements which may be required pursuant to Section 3(c), the earliest
practical date on which the Company is permitted by SEC Guidance to file such
additional Registration Statement related to the Registrable
Securities.

     

    
      
         

      

      
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   “Holder” or “Holders” means the
holder or holders, as the case may be, from time to time of Registrable
Securities.

     

     
   “Indemnified Party”
shall have the meaning set forth in Section 5(c).

     

     
   “Indemnifying Party”
shall have the meaning set forth in Section 5(c).

     

     
   “Initial
Registration Statement” means the initial Registration Statement filed
pursuant to this Agreement.

     

     
   “Initial
Shares” means a number of Registrable Securities equal to the lesser of
(i) the total number of Registrable Securities and (ii) one-third of
the number of issued and outstanding shares of Common Stock that are held by
non-affiliates of the Company on the day immediately prior to the filing date of
the Initial Registration Statement.

     

     
   “Losses” shall have
the meaning set forth in Section 5(a).

     

     
   “Plan of
Distribution” shall have the meaning set forth in
Section 2(a).

     

     
   “Prospectus” means the
prospectus included in a Registration Statement (including, without limitation,
a prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon
Rule 430A promulgated by the Commission pursuant to the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such
Prospectus.

     

     
   “Registrable
Securities” means (i) all Shares; (ii) all Warrant Shares
(assuming on the date of determination the Warrants are exercised in full
without regard to any exercise limitations therein), and (iii) any
securities issued or issuable upon any stock split, dividend or other
distribution, recapitalization or similar event with respect to the
foregoing.

     

     
   “Registration
Statement” means the registration statement required to be filed
hereunder and any additional registration statements contemplated by
Section 3(c), including (in each case) the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.

     

     
   “Rule 415” means
Rule 415 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any similar rule
or regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.
 

    
      
         

      

      
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   “Rule 424” means
Rule 424 promulgated by the Commission pursuant to the Securities Act, as
such Rule may be amended or interpreted from time to time, or any similar rule
or regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule.

     

     
   “Selling
Shareholder Questionnaire” shall have the meaning set forth in Section
3(a).

     

     
   “SEC
Guidance” means (i) any publicly-available written or oral guidance,
comments, requirements or requests of the Commission staff and (ii) the
Securities Act.

     

     
   2. Shelf
Registration

     

     
   (a) On or prior to each Filing Date, the Company shall prepare and
file with the Commission a Registration Statement covering the resale of all or
such maximum portion of the Registrable Securities as permitted by SEC Guidance
(provided that the Company shall use commercially reasonable efforts to advocate
with the Commission for the registration of all of the Registrable Securities in
accordance with the SEC Guidance, including without limitation, the Manual of
Publicly Available Telephone Interpretations D.29) that are not then registered
on an effective Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415. The Registration Statement shall be
on Form S-3 (except if the Company is not then eligible to register for resale
the Registrable Securities on Form S-3, in which case such registration shall be
on another appropriate form in accordance herewith) and shall contain (unless
otherwise directed by at least a 67% majority in interest of the Holders)
substantially the “Plan of Distribution”
attached hereto as Annex A. Subject to
the terms of this Agreement, the Company shall use commercially reasonable
efforts to cause a Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, but in any
event prior to the applicable Effectiveness Date, and shall use commercially
reasonable efforts to keep such Registration Statement continuously effective
under the Securities Act until all Registrable Securities covered by such
Registration Statement have been sold, or may be sold without volume limitations
pursuant to Rule 144(k), as determined by the counsel to the Company
pursuant to a written opinion letter to such effect, addressed and acceptable to
the Transfer Agent and the affected Holders (the “Effectiveness
Period”). The Company shall telephonically request effectiveness of a
Registration Statement as of 5:00 p.m. New York City time on a Trading Day. The
Company shall immediately notify the Holders via facsimile or by e-mail of the
effectiveness of a Registration Statement on the same Trading Day that the
Company telephonically confirms effectiveness with the Commission, which shall
be the date requested for effectiveness of such Registration Statement. The
Company shall, by 9:30 a.m. New York City time on the Trading Day after the
effective date of such Registration Statement, file a final Prospectus with the
Commission as required by Rule 424. Failure to so notify the Holder within
2 Trading Days of such notification of effectiveness or failure to file a final
Prospectus as foresaid shall be deemed an Event under Section 2(b).
Notwithstanding any other provision of this Agreement and subject to the payment
of liquidated
damages pursuant to Section 2(b), if any SEC Guidance sets forth a
limitation on the number of Registrable Securities permitted to be registered on
a particular Registration Statement (and notwithstanding that the Company used
commercially reasonable efforts to advocate with the Commission for the
registration of all or a greater portion of Registrable Securities), unless
otherwise directed in writing by a Holder as to its Registrable Securities, the
number of Registrable Securities to be registered on such Registration Statement
will first be reduced by Registrable Securities represented by Warrant Shares
(applied, in the case that some Warrant Shares may be registered, to the Holders
on a pro rata basis based on the total number of unregistered Warrant Shares
held by such Holders).

     

    
      
        
        

      

      
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   (b) If: (i) the Initial Registration Statement is not filed on
or prior to its Filing Date (if the Company files the Initial Registration
Statement without affording the Holders the opportunity to review and comment on
the same as required by Section 3(a) herein, the Company shall be deemed to have
not satisfied this clause (i)), or (ii) the Company fails to file with the
Commission a request for acceleration of a Registration Statement in accordance
with Rule 461 promulgated by the Commission pursuant to the Securities Act,
within five Trading Days of the date that the Company is notified (orally or in
writing, whichever is earlier) by the Commission that such Registration
Statement will not be “reviewed” or will not be subject to further review, or
(iii) prior to the effective date of a Registration Statement, the Company
fails to file a pre-effective amendment and otherwise respond in writing to
comments made by the Commission in respect of such Registration Statement within
15 Trading Days after the receipt of comments by or notice from the Commission
that such amendment is required in order for such Registration Statement to be
declared effective, or (iv) as to, in the aggregate among all Holders on a
pro-rata basis based on their purchase of the Securities pursuant to the
Purchase Agreement, a Registration Statement registering for resale all of the
Initial Shares is not declared effective by the Commission by the Effectiveness
Date of the Initial Registration Statement, or (v) all of the Registrable
Securities are not registered for resale pursuant to one or more effective
Registration Statements on or before August 31, 2008, or (vi) after
the effective date of a Registration Statement, such Registration Statement
ceases for any reason to remain continuously effective as to all Registrable
Securities included in such Registration Statement, or the Holders are otherwise
not permitted to utilize the Prospectus therein to resell such Registrable
Securities, for more than 10 consecutive calendar days or more than an aggregate
of 15 calendar days (which need not be consecutive calendar days) during any
12-month period (any such failure or breach being referred to as an “Event”, and for
purposes of clause (i), (iv) and (v) the date on which such Event
occurs, and for purposes of clause (ii) the date on which such five Trading
Day period is exceeded, and for purposes of clause (iii) the date which
such 10 calendar day period is exceeded, and for purposes of clause
(vi) the date on which such 10 or 15 calendar day period, as applicable, is
exceeded being referred to as “Event Date”), then,
in addition to any other rights the Holders may have hereunder or under
applicable law, on each such Event Date and on each monthly anniversary of each
such Event Date (if the applicable Event shall not have been cured by such date)
until the applicable Event is cured, the Company shall pay to each Holder an
amount in cash, as partial liquidated damages and not as a penalty, equal to 1%
of the aggregate purchase price
paid by such Holder pursuant to the Purchase Agreement for any unregistered
Registrable Securities then held by such Holder. The parties agree that
(1) to the extent an Event is caused by the occurrence of a prior Event,
for purposes of calculation of liquidated damages hereunder, only one Event
shall be deemed to have occurred; (2) the Company shall not be liable for
liquidated damages under this Agreement with respect to any Warrants or Warrant
Shares and (3) the maximum aggregate liquidated damages payable to a Holder
under this Agreement shall be 15% of the aggregate Subscription Amount paid by
such Holder pursuant to the Purchase Agreement. If the Company fails to pay any
partial liquidated damages pursuant to this Section in full within seven days
after the date payable, the Company will pay interest thereon at a rate of 18%
per annum (or such lesser maximum amount that is permitted to be paid by
applicable law) to the Holder, accruing daily from the date such partial
liquidated damages are due until such amounts, plus all such interest thereon,
are paid in full. The partial liquidated damages pursuant to the terms hereof
shall apply on a daily pro rata basis for any portion of a month prior to the
cure of an Event.

     

    
      
        
        

      

      
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   3. Registration
Procedures.

     

     
   In connection with the Company’s registration obligations
hereunder, the Company shall:

     

     
   (a) Not less than 5 Trading Days prior to the filing of each
Registration Statement and not less than one Trading Day prior to the filing of
any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall (i) furnish to each Holder copies of all such
documents substantially in the form proposed to be filed, which documents (other
than those incorporated or deemed to be incorporated by reference) will be
subject to the review of such Holders and (ii) cause its officers and
directors, counsel and independent certified public accountants to respond to
such inquiries as shall be necessary, in the reasonable opinion of respective
counsel to each Holder, to conduct a reasonable investigation within the meaning
of the Securities Act. The Company shall not file a Registration Statement or
any such Prospectus or any amendments or supplements thereto relating to the
Registrable Securities to which the Holders of a majority of the Registrable
Securities shall reasonably object in good faith, provided that the Company is
notified of such objection in writing no later than 5 Trading Days after the
Holders have been so furnished copies of a Registration Statement or 1 Trading
Day after the Holders have been so furnished copies of any related Prospectus or
amendments or supplements thereto. Each Holder agrees to furnish to the Company
a completed questionnaire in the form attached to this Agreement as Annex B (a
“Selling Shareholder
Questionnaire”) not less than three Trading Days prior to the Filing Date
or by the end of the fourth Trading Day following the date on which such Holder
receives draft materials in accordance with this Section.

     

    
      
        
        

      

      
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   (b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to a Registration Statement and the
Prospectus used in connection therewith as may be necessary to keep a
Registration Statement continuously effective
as to the applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such additional Registration Statements in
order to register for resale under the Securities Act all of the Registrable
Securities; (ii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement (subject to the terms of this Agreement),
and, as so supplemented or amended, to be filed pursuant to Rule 424;
(iii) respond as promptly as reasonably possible to any comments received
from the Commission with respect to a Registration Statement or any amendment
thereto and provide as promptly as reasonably possible to the Holders true and
complete copies of all correspondence from and to the Commission relating to a
Registration Statement (provided that the Company may excise any information
contained therein which would constitute material non-public information as to
any Holder which has not executed a confidentiality agreement with the Company);
and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by a Registration Statement during the applicable
period in accordance (subject to the terms of this Agreement) with the intended
methods of disposition by the Holders thereof set forth in such Registration
Statement as so amended or in such Prospectus as so supplemented.

     

     
   (c) If during the Effectiveness Period, the number of Registrable
Securities at any time exceeds 100% of the number of shares of Common Stock then
registered in a Registration Statement, then the Company shall file as soon as
reasonably practicable, but in any case prior to the applicable Filing Date, an
additional Registration Statement covering the resale by the Holders of not less
than the number of such Registrable Securities.

     

     
   (d) Notify the Holders of Registrable Securities to be sold (which
notice shall, pursuant to clauses (iii) through (vi) hereof, be
accompanied by an instruction to suspend the use of the Prospectus until the
requisite changes have been made) as promptly as reasonably possible (and, in
the case of (i)(A) below, not less than two Trading Days prior to such filing)
and (if requested by any such Person) confirm such notice in writing no later
than two Trading Days following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to a Registration Statement is
proposed to be filed; (B) when the Commission notifies the Company whether
there will be a “review” of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement; and (C) with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any
other federal or state governmental authority for amendments or supplements to a
Registration Statement or Prospectus or for additional information;
(iii) of the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the effectiveness of a
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; (v) of the occurrence of any event or passage of time that makes
the financial statements included in a Registration Statement ineligible for
inclusion
therein or any statement made in a Registration Statement or Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires any revisions to a Registration
Statement, Prospectus or other documents so that, in the case of a Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and (vi) of the
occurrence or existence of any pending corporate development with respect to the
Company that the Company believes may be material and that, in the determination
of the Company, makes it not in the best interest of the Company to allow
continued availability of a Registration Statement or Prospectus, provided that
any and all of such information shall remain confidential to each Holder until
such information otherwise becomes public, unless disclosure by a Holder is
required by law; provided, further, that
notwithstanding each Holder’s agreement to keep such information confidential,
each such Holder makes no acknowledgement that any such information is material,
non-public information.

     

    
      
        
        

      

      
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   (e) Use commercially reasonable efforts to avoid the issuance of,
or, if issued, obtain the withdrawal of (i) any order stopping or
suspending the effectiveness of a Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, at the earliest practicable
moment.

     

     
   (f) Furnish to each Holder, without charge, at least one conformed
copy of each such Registration Statement and each amendment thereto, including
financial statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission; provided, that any such item which is available
on the EDGAR system need not be furnished in physical form.

     

     
   (g) Subject to the terms of this Agreement, the Company hereby
consents to the use of such Prospectus and each amendment or supplement thereto
by each of the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any amendment or
supplement thereto, except after the giving of any notice pursuant to
Section 3(d).

     

     
   (h) The Company shall cooperate with any broker-dealer effecting
resales of Registrable Securities in making any required filing with the
National Association of Securities Dealers, Inc. (“NASD”) Corporate
Financing Department pursuant to NASD Rule 2710 and pay the filing fee
required by such filing.

     

    
      
        
        

      

      
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   (i) Prior to any resale of Registrable Securities by a Holder, use
its commercially reasonable efforts to register or qualify or cooperate with the
selling Holders in connection with the registration or qualification (or
exemption from the Registration
or qualification) of such Registrable Securities for the resale by the Holder
under the securities or Blue Sky laws of such jurisdictions within the United
States as any Holder reasonably requests in writing, to keep each registration
or qualification (or exemption therefrom) effective during the Effectiveness
Period and to do any and all other acts or things reasonably necessary to enable
the disposition in such jurisdictions of the Registrable Securities covered by
each Registration Statement; provided, that the Company shall not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified, subject the Company to any material tax in any such jurisdiction
where it is not then so subject or file a general consent to service of process
in any such jurisdiction.

     

     
   (j) If requested by a Holder, cooperate with such Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities, other than Warrants, to be delivered to a transferee
pursuant to a Registration Statement, which certificates shall be free, to the
extent permitted by the Purchase Agreement, of all restrictive legends, and to
enable such Registrable Securities to be in such denominations and registered in
such names as any such Holder may request.

     

     
   (k) Upon the occurrence of any event contemplated by
Section 3(d), as promptly as reasonably possible under the circumstances
taking into account the Company’s good faith assessment of any adverse
consequences to the Company and its stockholders of the premature disclosure of
such event, prepare a supplement or amendment, including a post-effective
amendment, to a Registration Statement or a supplement to the related Prospectus
or any document incorporated or deemed to be incorporated therein by reference,
and file any other required document so that, as thereafter delivered, neither a
Registration Statement nor such Prospectus will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If the Company notifies the Holders in
accordance with clauses (iii) through (vi) of Section 3(d) above to
suspend the use of any Prospectus until the requisite changes to such Prospectus
have been made, then the Holders shall suspend use of such Prospectus. The
Company will use commercially reasonable efforts to ensure that the use of the
Prospectus may be resumed as promptly as is practicable. The Company shall be
entitled to exercise its right under this Section 3(k) to suspend the
availability of a Registration Statement and Prospectus, subject to the payment
of partial liquidated damages otherwise required pursuant to Section 2(b),
for a period not to exceed 60 calendar days (which need not be consecutive days)
in any 12 month period.

     

     
   (l) Comply with all applicable rules and regulations of the
Commission.

     

     
   (m) The Company may require each selling Holder to furnish to the
Company a certified statement as to the number of shares of Common Stock
beneficially owned by such Holder and, if required by the Commission, the
natural persons thereof that have voting and dispositive control over the
shares. If the Company is unable to meet its obligations hereunder with respect
to the registration of the Registrable Securities solely because
any Holder fails to furnish such information within three Trading Days of the
Company’s request, the Company may exclude such Holder’s Registrable Securities
from the Registrable Securities being registered, until such Holder shall have
provided all such required information (provided there is sufficient time to
include such Registrable Shares), and such non-responsive Holder shall have no
recourse against the Company therefor.

     

    
      
        
        

      

      
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   4. Registration
Expenses. All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses of the Company’s counsel and
auditors) (A) with respect to filings made with the Commission,
(B) with respect to filings required to be made with any Trading Market on
which the Common Stock is then listed for trading, (C) in compliance with
applicable state securities or Blue Sky laws reasonably agreed to by the Company
in writing (including, without limitation, fees and disbursements of counsel for
the Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities) and (D) if not previously paid by the Company in
connection with an Issuer Filing, with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with the NASD pursuant to NASD Rule 2710, so long
as the broker is receiving no more than a customary brokerage commission in
connection with such sale, (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities),
(iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability
insurance, if the Company so desires such insurance, and (vi) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement. In addition,
the Company shall be responsible for all of its internal expenses incurred in
connection with the consummation of the transactions contemplated by this
Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or
similar commissions of any Holder or, except to the extent provided for in the
Transaction Documents, any legal fees or other costs of the
Holders.

     

    
      
        
        

      

      
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   5. Indemnification.

     

     
   (a) Indemnification by the
Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors,
members, partners, agents, brokers (including brokers who offer and sell
Registrable Securities as principal as a result of a pledge or any failure to
perform under a margin call of Common Stock), investment advisors and employees
(and any other Persons with a functionally equivalent role of a Person holding
such titles, notwithstanding a lack of such title or any other title) of each of
them, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, members, shareholders, partners,
agents and employees (and any other Persons with a functionally equivalent role
of a Person holding such titles, notwithstanding a lack of such title or any
other title) of each such controlling Person, to the fullest extent permitted by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, reasonable attorneys’ fees)
and expenses (collectively, “Losses”), as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading or (2) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act or any state securities law, or any rule or
regulation thereunder, in connection with the performance of its obligations
under this Agreement, except to the extent, but only to the extent, that
(i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder’s proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or in any
amendment or supplement thereto (it being understood that the Holder has
approved Annex A hereto for this purpose) or (ii) in the case of an
occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in
Section 6(d). The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding arising from or in connection
with the transactions contemplated by this Agreement of which the Company is
aware.

     

     
   (b) Indemnification by
Holders. Each Holder shall, severally and not jointly, indemnify and hold
harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest extent
permitted by applicable law, from and against all Losses, as incurred, to the
extent arising out of or based solely upon: (x) such Holder’s failure to
comply with the prospectus delivery requirements of the Securities Act or
(y) any untrue or alleged untrue statement of a material fact contained in
any Registration Statement, any Prospectus, or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading (i) to the extent,
but only to the extent, that such untrue statement or omission is contained in
any information so furnished in writing by such Holder to the Company
specifically for inclusion in such Registration Statement or such Prospectus or
(ii) to the extent that such information relates to such Holder’s proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in a Registration Statement
(it being understood
that the Holder has approved Annex A hereto for this purpose), such Prospectus
or in any amendment or supplement thereto or (ii) in the case of an
occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the
use by such Holder of an outdated or defective Prospectus after the Company has
notified such Holder in writing that the Prospectus is outdated or defective and
prior to the receipt by such Holder of the Advice contemplated in
Section 6(d). In no event shall the liability of any selling Holder
hereunder be greater in amount than the dollar amount of the net proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation.

     

    
      
        
        

      

      
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   (c) Conduct of Indemnification
Proceedings. If any Proceeding shall be brought or asserted against any
Person entitled to indemnity hereunder (an “Indemnified Party”),
such Indemnified Party shall promptly notify the Person from whom indemnity is
sought (the “Indemnifying Party”)
in writing, and the Indemnifying Party shall have the right to assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.

     

     
   An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
in writing to pay such fees and expenses; (2) the Indemnifying Party shall
have failed promptly to assume the defense of such Proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such
Proceeding; or (3) the named parties to any such Proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and counsel to the Indemnified Party shall reasonably believe that a
material conflict of interest is likely to exist if the same counsel were to
represent such Indemnified Party and the Indemnifying Party (in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
the reasonable fees and expenses of no more than one separate counsel shall be
at the expense of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.

     

    
      
        
        

      

      
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   Subject to the terms of this Agreement, all reasonable fees and
expenses of the Indemnified Party (including reasonable fees and expenses to the
extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Trading Days of written notice thereof to the Indemnifying
Party; provided, that the Indemnified Party shall promptly reimburse the
Indemnifying Party for that portion of such fees and expenses applicable to such
actions for which such Indemnified Party is judicially determined to be not
entitled to indemnification hereunder.

     

     
   (d) Contribution. If the
indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified
Party or insufficient to hold an Indemnified Party harmless for any Losses, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in this Agreement, any reasonable attorneys’ or other fees or expenses incurred
by such party in connection with any Proceeding to the extent such party would
have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its
terms.

     

     
   The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 5(d), no Holder shall be
required to contribute, in the aggregate, any amount in excess of the amount by
which the net proceeds actually received by such Holder from the sale of the
Registrable Securities subject to the Proceeding exceeds the amount of any
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.

     

     
   The indemnity and contribution agreements contained in this Section
are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

       

    

     
   6. Miscellaneous.

     

     
   (a) Remedies. In the
event of a breach by the Company or by a Holder of any of their respective
obligations under this Agreement, each Holder or the Company, as the case may
be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, shall be entitled to
specific performance of its rights under this Agreement.
The Company and each Holder agree that monetary damages would not provide
adequate compensation for any losses incurred by reason of a breach by it of any
of the provisions of this Agreement and hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall not
assert or shall waive the defense that a remedy at law would be
adequate.

     

     
   (b) Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to a Registration Statement.

     

     
   (c) Discontinued
Disposition. By its acquisition of Registrable Securities, each Holder
agrees that, upon receipt of a notice from the Company of the occurrence of any
event of the kind described in Section 3(d)(iii) through (vi), such Holder
will forthwith discontinue disposition of such Registrable Securities under a
Registration Statement until it is advised in writing (the “Advice”) by the
Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use commercially
reasonable efforts to ensure that the use of the Prospectus may be resumed as
promptly as is practicable. The Company agrees and acknowledges that any periods
during which the Holder is required to discontinue the disposition of the
Registrable Securities hereunder shall be subject to the provisions of
Section 2(b).

     

     
   (d) Piggy-Back
Registrations. If, at any time during the Effectiveness Period, there is
not an effective Registration Statement covering all of the Registrable
Securities and the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or their then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with the Company’s stock option or
other employee benefit plans, then the Company shall deliver to each Holder a
written notice of such determination and, if within fifteen days after the date
of the delivery of such notice, any such Holder shall so request in writing, the
Company shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered; provided, however, that the
Company shall not be required to register any Registrable Securities pursuant to
this Section 6(d) that are eligible for resale pursuant to Rule 144(k)
promulgated by the Commission pursuant to the Securities Act or that are the
subject of a then effective Registration Statement.

     

     
   (e) Amendments and
Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holders of a majority
of the then outstanding Registrable Securities (including, for this purpose any
Registrable Securities issuable upon exercise or conversion of any Security). If
a Registration Statement does not register all of the Registrable Securities
pursuant to a waiver or amendment done in compliance with the previous sentence,
then the number of Registrable Securities to be registered for each Holder shall
be reduced pro rata among all Holders and each Holder shall have the right to
designate which of its Registrable
Securities shall be omitted from such Registration Statement. Notwithstanding
the foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of a Holder or some
Holders and that does not directly or indirectly affect the rights of other
Holders may be given by such Holder or Holders of all of the Registrable
Securities to which such waiver or consent relates; provided, however, that the
provisions of this sentence may not be amended, modified, or supplemented except
in accordance with the provisions of the first sentence of this
Section 6(f).

     

    
      
        
        

      

      
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   (f) Notices. Any and all
notices or other communications or deliveries required or permitted to be
provided hereunder shall be delivered as set forth in the Purchase
Agreement.

     

     
   (g) Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the successors and permitted assigns of each of the parties and shall inure to
the benefit of each Holder. The Company may not assign (except by merger) its
rights or obligations hereunder without the prior written consent of all of the
Holders of the then outstanding Registrable Securities. Each Holder may assign
their respective rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement.

     

     
   (h) No Inconsistent
Agreements. Neither the Company nor any of its Subsidiaries has entered,
as of the date hereof, nor shall the Company or any of its Subsidiaries, on or
after the date of this Agreement, enter into any agreement with respect to its
securities, that would conflict with the provisions hereof. Except as set forth
on Schedule 6(i),
neither the Company nor any of its Subsidiaries has previously entered into any
agreement granting any registration rights with respect to any of its securities
to any Person that have not been satisfied in full.

     

     
   (i) Execution and
Counterparts. This Agreement may be executed in two or more counterparts,
all of which when taken together shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a “.pdf” format data file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or “.pdf” signature page were an original thereof.

     

     
   (j) Governing Law. All
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be determined in accordance with the provisions of the
Purchase Agreement.

     

     
   (k) Cumulative Remedies.
Except as otherwise provided herein, the remedies provided herein are cumulative
and not exclusive of any other remedies provided by law.

     

     
   (l) Severability. If any
term, provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their commercially reasonable
efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

     

    
      
        
        

      

      
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   (m) Headings. The
headings in this Agreement are for convenience only, do not constitute a part of
the Agreement and shall not be deemed to limit or affect any of the provisions
hereof.

     

     
   (n) Independent Nature of
Holders’ Obligations and Rights. The obligations of each Holder hereunder
are several and not joint with the obligations of any other Holder hereunder,
and no Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein or in any
other agreement or document delivered at any closing, and no action taken by any
Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as
a partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Holders are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Holder shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.

     

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

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

     

     
   IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.

     

    
      
        	 
      	 
      	
                OCULUS
      INNOVATIVE SCIENCES, INC.

              	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	
                By:

              	 
      	
                /s/
      Jim Schutz

              	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                Name:
      Jim Schutz

                Title:
      General Counsel

              	 
      	 
      

      

    

     

    [SIGNATURE
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        16

        
          

        

      

      
         

      

    

     

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Aristeia International Limited

     

    Signature of Authorized Signatory of
Holder:  /s/ Chong Park

     

    Name of
Authorized Signatory:  Chong Park

     

    Title of
Authorized Signatory: Portfolio Manager

     

    [SIGNATURE
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    [SIGNATURE
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    Name of
Holder:  Aristeia Partners L.P.

     

    Signature of Authorized Signatory of
Holder:  /s/ Chong Park

     

    Name of
Authorized Signatory:  Chong Park

     

    Title of
Authorized Signatory: Portfolio Manager

     

    [SIGNATURE
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    [SIGNATURE
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    Name of
Holder:  Aristeia Special Investments Master, L.P.

     

    Signature of Authorized Signatory of
Holder:  /s/ Chong Park

     

    Name of
Authorized Signatory:  Chong Park

     

    Title of
Authorized Signatory: Portfolio Manager

     

    [SIGNATURE
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    [SIGNATURE
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    Name of
Holder:  Avendis Absolute Alternative 1 Trading Ltd

     

    Signature of Authorized Signatory of
Holder:  /s/ Yannis Bilquez

     

    Name of
Authorized Signatory: Yannis Bilquez

     

    Title of
Authorized Signatory: Director

     

    [SIGNATURE
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    [SIGNATURE
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    Name of
Holder: Cranshire Capital, L.P.

     

    Signature of Authorized Signatory of
Holder:  /s/ Lawrence Prosser

     

    Name of
Authorized Signatory:  Lawrence Prosser

     

    Title of
Authorized Signatory: CFO – Downsview Capital, Inc., the General
Partner

     

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    [SIGNATURE
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    Name of
Holder: Crescent International Ltd

     

    Signature of Authorized Signatory of
Holder:  /s/ Maxi Brezzi

     

    Name of
Authorized Signatory:  Maxi Brezzi

     

    Title of
Authorized Signatory: 

     

    [SIGNATURE
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        17

        
          

        

      

      
         

      

    

    [SIGNATURE
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    Name of
Holder:  Diamond Opportunity Fund, LLC

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard Marks

     

    Name of
Authorized Signatory:  Richard Marks

     

    Title of
Authorized Signatory: Managing Director

     

    [SIGNATURE
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    [SIGNATURE
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    Name of
Holder:  Double U Master Fund, LLC

     

    Signature of Authorized Signatory of
Holder:  /s/ Sheldon Traube

     

    Name of
Authorized Signatory:  Sheldon Traube 

     

    Title of
Authorized Signatory: 

     

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       [SIGNATURE
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      Name of
Holder:  Egatniv, LLC

       

      Signature of Authorized Signatory of
Holder:  /s/ Seth Farbman

       

      Name of
Authorized Signatory:  Seth Farbman

       

      Title of
Authorized Signatory: Member

       

      [SIGNATURE
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      [SIGNATURE
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      Name of
Holder:  Graham Anderson

       

      Signature of Authorized Signatory of
Holder:  /s/ Graham Anderson

       

      Name of
Authorized Signatory:  Graham Anderson

       

      Title of
Authorized Signatory: 

       

      [SIGNATURE
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      [SIGNATURE
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      Name of
Holder:  Franklin Biotechnology Discovery Fund

       

      Signature of Authorized Signatory of
Holder:  /s/ Evan McCulloch

       

      Name of
Authorized Signatory:  Evan McCulloch

       

      Title of
Authorized Signatory: Vice President

       

      [SIGNATURE
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      [SIGNATURE
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      Name of
Holder:  Highbridge International, LLC

       

      Signature of Authorized Signatory of
Holder:  /s/ Scott Wallace

       

      Name of
Authorized Signatory:  Scott Wallace

       

      Title of
Authorized Signatory: Senior Vice President

       

      [SIGNATURE
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          17

          
            

          

        

        
           

        

      

      [SIGNATURE
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      Name of
Holder:  Iroquois Master Fund, Ltd.

       

      Signature of Authorized Signatory of
Holder:  /s/ Joshua Silverman

       

      Name of
Authorized Signatory:  Joshua Silverman

       

      Title of
Authorized Signatory: 

       

      [SIGNATURE
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      [SIGNATURE
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      Name of
Holder: Lincoln Biotech Ventures II, L.P.

       

      Signature of Authorized Signatory of
Holder:  /s/ Robert Carver

       

      Name of
Authorized Signatory: Robert Carver

       

      Title of
Authorized Signatory: Secretary, Lincoln Funds International

       

      [SIGNATURE
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          17

          
            

          

        

        
           

        

      

      [SIGNATURE
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      Name of
Holder: Otago Partners, LLC

       

      Signature of Authorized Signatory of
Holder:  /s/ Lindsay A. Rosenwald, MD

       

      Name of
Authorized Signatory:  Lindsay A. Rosenwald, MD

       

      Title of
Authorized Signatory: Managing Member

       

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      [SIGNATURE
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      Name of
Holder:  Perceptive Life Sciences Master Fund LTD

       

      Signature of Authorized Signatory of
Holder:  /s/ Joe Edelman

       

      Name of
Authorized Signatory:  Joe Edelman

       

      Title of
Authorized Signatory: Managing Member

       

      [SIGNATURE
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      [SIGNATURE
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      Name of
Holder:  Catalytix LDC Life Science Hedge AC

       

      Signature of Authorized Signatory of
Holder:  /s/ Ted Kalem

       

      Name of
Authorized Signatory:  Ted Kalem

       

      Title of
Authorized Signatory: Partner

       

      [SIGNATURE
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      [SIGNATURE
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      Name of
Holder:  Rockmore Investment Master Fund, Ltd

       

      Signature of Authorized Signatory of
Holder:  /s/ Brian Daly

       

      Name of
Authorized Signatory:  Brian Daly

       

      Title of
Authorized Signatory: Director

       

      [SIGNATURE
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          17

          
            

          

        

        
           

        

      

      [SIGNATURE
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      Name of
Holder:  RRC Biofund, LP

       

      Signature of Authorized Signatory of
Holder:  /s/ Jim Silverman

       

      Name of
Authorized Signatory:  Jim Silverman

       

      Title of
Authorized Signatory: Managing Director

       

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      [SIGNATURE
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      Name of
Holder:  Whalehaven Capital Fund Limited

       

      Signature of Authorized Signatory of
Holder:  /s/ Brian Mazzella

       

      Name of
Authorized Signatory:  Brian Mazzella

       

      Title of
Authorized Signatory: CFO

       

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      [SIGNATURE
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      Name of
Holder:  Daniel B. and Linda O. Ahlberg Trustees FBO Ahlberg Joint
Revocable Trust u/a dtd 8/27/06

       

      Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

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            17

            
              

            

          

          
             

          

        

      [SIGNATURE
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      Name of
Holder:  Alice Ann Corporation

       

      Signature of Authorized Signatory of
Holder:  /s/ Dick Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

      [SIGNATURE
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            17

            
              

            

          

          
             

          

        

      [SIGNATURE
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      Name of
Holder:  Robert G. Allison

       

      Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

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          17

          
            

          

        

        
           

        

      

      [SIGNATURE
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      Name of
Holder:  William H. Baxter Trustee FBO William H. Baxter Revocable Trust
u/a dtd 7/3/96

       

      Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

      [SIGNATURE
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      [SIGNATURE
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      Name of
Holder:  Piper Jaffray as Custodian FBO William H. Baxter IRA

       

      Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Dick Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

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      [SIGNATURE
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      Name of
Holder:  David & Carol Brown Trustees FBO David & Carol Brown
Revocable Trust u/a dtd 10/23/97

       

      Signature of Authorized Signatory of
Holder: /s/ Richard C. Perkins

       

      Name of
Authorized Signatory: Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

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      [SIGNATURE
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      Name of
Holder:  Piper Jaffray as Custodian FBO Robert H. Clayburgh
IRA

       

      Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

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          17

          
            

          

        

        
           

        

      

      [SIGNATURE
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      Name of
Holder:  Gary & Leslie Clipper JTWROS

       

      Signature of Authorized Signatory of
Holder: /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

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      [SIGNATURE
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      Name of
Holder:  Piper Jaffray as Custodian FBO Mark Donahoe IRA

       

      Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

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      [SIGNATURE
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      Name of
Holder:  Dennis D. Gonyea

       

      Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

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      [SIGNATURE
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      Name of
Holder:  Richard A. Hoel

       

      Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

       

      Name of
Authorized Signatory:  Richard C. Perkins

       

      Title of
Authorized Signatory: Executive Vice President

       

      [SIGNATURE
PAGES CONTINUE]

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Elizabeth J. Kuehne

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Piper Jaffray as Custodian FBO Elizabeth J. Kuehne
IRA

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Piper Jaffray as Custodian FBO Michael E. McElligott
SPN/PRO

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Piper Jaffray as Custodian FBO Charles W. Pappas IRA

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  John T. Potter

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Carolyn Salon

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Joel A. Salon

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Paul C. Seel & Nancy S. Seel JTWROS

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  E. Terry Skone, TTEE FBO E. Terry Skone Revocable Trust U/A dtd
11/30/05

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Donald O. & Janet M. Voight TTEE’s FBO Janet M. Voight Trust
U/A dtd 8/29/96

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Piper Jaffray as Custodian FBO James B. Wallace
SPN/PRO

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        50

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  David M. Wertrum, TTEE FBO David M. Westrum Revocable Living Trust
u/a dtd 6/1/97

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Piper Jaffray as Custodian FBO Michael R. Wilcox IRA

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    [SIGNATURE
PAGES CONTINUE]

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    [SIGNATURE
PAGE OF HOLDERS TO OCLS RRA]

     

    Name of
Holder:  Pyramid Partners, L.P.

     

    Signature of Authorized Signatory of
Holder:  /s/ Richard C. Perkins

     

    Name of
Authorized Signatory:  Richard C. Perkins

     

    Title of
Authorized Signatory: Executive Vice President

     

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

     

    Annex A

     

    Plan of
Distribution

     

    Each
Selling Stockholder (the “Selling
Stockholders”) of the common stock and any of their pledgees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock on the NASDAQ Global Market or any other stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. A Selling
Stockholder may use any one or more of the following methods when selling
shares:

     

    
      	
               
      

            	
              •

            	
              ordinary
      brokerage transactions and transactions in which the broker-dealer
      solicits purchasers;

            

    

    

    
      	
               
      

            	
              •

            	
              block
      trades in which the broker-dealer will attempt to sell the shares as agent
      but may position and resell a portion of the block as principal to
      facilitate the transaction;

            

    

    

    
      	
               
      

            	
              •

            	
              purchases
      by a broker-dealer as principal and resale by the broker-dealer for its
      account;

            

    

    

    
      	
               
      

            	
              •

            	
              an
      exchange distribution in accordance with the rules of the applicable
      exchange;

            

    

    

    
      	
               
      

            	
              •

            	
              privately
      negotiated transactions;

            

    

    

    
      	
               
      

            	
              •

            	
              settlement
      of short sales entered into after the effective date of the registration
      statement of which this prospectus is a
part;

            

    

    

    
      	
               
      

            	
              •

            	
              broker-dealers
      may agree with the Selling Stockholders to sell a specified number of such
      shares at a stipulated price per
share;

            

    

    

    
      	
               
      

            	
              •

            	
              through
      the writing or settlement of options or other hedging transactions,
      whether through an options exchange or
  otherwise;

            

    

    

    
      	
               
      

            	
              •

            	
              a
      combination of any such methods of sale;
or

            

    

    

    
      	
               
      

            	
              •

            	
              any
      other method permitted pursuant to applicable
  law.

            

    

     

    The
Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the “Securities Act”), if
available, rather than under this prospectus.

     

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

     

    Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage commission in compliance
with NASDR Rule 2440; and in the case of a principal transaction a markup
or markdown in compliance with NASDR IM-2440.

     

    
      
        
        

      

      
        19

        
          

        

      

      
        
        

      

    

     

    In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).

     

    The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).

     

    The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

     

    Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any
securities covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather
than under this prospectus. There is no underwriter or coordinating broker
acting in connection with the proposed sale of the resale shares by the Selling
Stockholders.

     

    We agreed
to keep this prospectus effective until the earlier of (i) the date on
which the shares may be resold by the Selling Stockholders without registration
and without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect or (ii) all of the
shares have been sold pursuant to this prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In addition, in certain states, the resale
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

     

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

     

    Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases
and sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).

     

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

     

    Annex
B

     

    OCULUS
INNOVATIVE SCIENCES, INC.

     

    Selling
Securityholder Notice and Questionnaire

     

    The
undersigned beneficial owner of common stock (the “Registrable
Securities”) of Oculus Innovative Sciences, Inc., a Delaware corporation
(the “Company”),
understands that the Company has filed or intends to file with the Securities
and Exchange Commission (the “Commission”) a
registration statement (the “Registration
Statement”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of
the Registrable Securities, in accordance with the terms of the Registration
Rights Agreement (the “Registration Rights
Agreement”) to which this document is annexed. A copy of the Registration
Rights Agreement is available from the Company upon request at the address set
forth below. All capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Registration Rights Agreement.

     

    Certain
legal consequences arise from being named as a selling securityholder in the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Registration Statement and the related
prospectus.

     

    NOTICE

     

    The
undersigned beneficial owner (the “Selling
Securityholder”) of Registrable Securities hereby elects to include the
Registrable Securities owned by it in the Registration Statement.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

     

    The
undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

     

    QUESTIONNAIRE

     

    1.
Name.

     

    
      
        	 	
                (a)

              	
                Full
      Legal Name of Selling
Securityholder

              

      

       

      
        	 	
                (b)

              	
                Full
      Legal Name of Registered Holder (if not the same as (a) above)
      through which Registrable Securities are
held:

              

      

       

      
        	 	
                (c)

              	
                Full
      Legal Name of Natural Control Person (which means a natural person who
      directly or indirectly alone or with others has power to vote or dispose
      of the securities covered by this
  Questionnaire):

              

      

       

    

    2.
Address for Notices to Selling Securityholder:

     

    
      
        
          
            	
                    Telephone:

                  	 
      	 
      

          

        

      

    

     

    
      
        
          
            	
                    Fax:

                  	 
      	 
      

          
  

      

    

    
      
        
          
            	
                    Contact
      Person:

                  	 
      	 
      

          

        

      

    

     

    3.
Broker-Dealer Status:

     

    
      
        	 	
                (a)

              	
                Are
      you a broker-dealer?

              

      

       

      Yes   ̈      No   ̈

       

      
        	 	
                (b)

              	
                If
      “yes” to Section 3(a), did you receive your Registrable Securities as
      compensation for investment banking services to the
    Company?

              

      

       

      Yes   ̈      
No   ̈

       

    

    Note: If
“no” to Section 3(b), the Commission’s staff has indicated that you should
be identified as an underwriter in the Registration Statement.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

     

    
      
        	 	
                (c)

              	
                Are
      you an affiliate of a
broker-dealer?

              

      

       

      Yes   ̈      No   ̈

       

      
        	 	
                (d)

              	
                If
      you are an affiliate of a broker-dealer, do you certify that you purchased
      the Registrable Securities in the ordinary course of business, and at the
      time of the purchase of the Registrable Securities to be resold, you had
      no agreements or understandings, directly or indirectly, with any person
      to distribute the Registrable
Securities?

              

      

       

      Yes   ̈     No   ̈

       

      Note: If
“no” to Section 3(d), the Commission’s staff has indicated that you should
be identified as an underwriter in the Registration Statement.

       

    

    4.
Beneficial Ownership of Securities of the Company Owned by the Selling
Securityholder.

     

    Except
as set forth below in this Item 4, the undersigned is not the beneficial or
registered owner of any securities of the Company other than the securities
issuable pursuant to the Purchase Agreement.

     

    
      
        	 	
                (a)

              	
                Type
      and Amount of other securities beneficially owned by the Selling
      Securityholder:

              

      

      

        
          
             

          

          
            24

            
              

            

          

          
             

          

        

      

    

     

    5.
Relationships with the Company:

     

    Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors or principal equity holders (owners of 5% of more of the equity
securities of the undersigned) has held any position or office or has had any
other material relationship with the Company (or its predecessors or affiliates)
during the past three years.

     

    State any
exceptions here:

     

     The
undersigned agrees to promptly notify the Company of any inaccuracies or changes
in the information provided herein that may occur subsequent to the date hereof
at any time while the Registration Statement remains effective.

     

    By
signing below, the undersigned consents to the disclosure of the information
contained herein in its answers to Items 1 through 5 and the inclusion of such
information in the Registration Statement and the related
prospectus            and
any amendments or supplements thereto . The undersigned understands that such
information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related
prospectus.

     

    IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.

     

    Date:                                         

     

    
      
        
          
            	 
      	 
      	
                    Beneficial Owner:

                  	 
      	 
      	 
      	 
      

          

        

      

    

     

    
      
        
          
            	 
      	 
      	
                    By:

                  	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	
                    Name:

                  	 
      	 
      
	 
      	 
      	 
      	 
      	
                    Title:

                  	 
      	 
      

          

        

      

    

     

    PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO
650-233-4545, ATTENTION: SEBASTIEN NICOLAS, AND RETURN THE ORIGINAL BY OVERNIGHT
MAIL, TO: SEBASTIEN NICOLAS, 2475 HANOVER STREET, PALO ALTO, CA
94304.
 

    
      
         

      

      
        25

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