Document:

exh10-5.htm

Exhibit 10.5

THE INNES GROUP, INC.

SHARE OPTION PLAN

Dated for Reference January 25, 2008 (the "Share Option Plan" or "Plan")

PART 1

PURPOSE AND INTERPRETATION

Purpose

1.1                      The purpose of the Plan will be to advance the interests of the Company by encouraging equity participation in the Company through the acquisition of Common Shares of the Company.

Definitions

1.2                      In this Plan the following terms have the meanings set forth as follows:

(a)           Board means the board of directors of the Company, or if formed, the

Compensation Committee of the Board;

(b)           Common Shares means common shares in the capital of the Company;

(c)           Company means The Innes Group, Inc. (DBA: MCorp) and for purposes of eligibility, includes every subsidiary;

(d)           Consultant means a person or company, other than an Employee, Officer, or Director, that is engaged to provide services to the Company, provides the services under a written contract with the Company, and spends or will spend a significant amount of time and attention on the affairs and business of the Company;

(e)           Director means a director of the Company;

(f)           Effective Date for an Option means the date the option is granted to the Service Provider by the Board;

(g)           Employee means an individual who is a regular full time or part time employee of the Company from whose pay source deductions are taken;

(h)           Exercise Price means the amount payable per Common Share on the exercise of an Option, as determined in accordance with section 3.1 or 3.2, as applicable;

(i)           Expiry Date means the day on which an Option lapses as specified in the Option Commitment or in accordance with the terms of the Plan;

  

  

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(j)           IPO means the initial offering of Common Shares sold under a prospectus filed under applicable securities legislation;

(k)           IPO Date means the date on which the Company completes the IPO;

(1)           Officer means an individual who holds a titled office naming him/her senior officer of the Company;

(m)          Option means the right to purchase Common Shares granted under the Plan to a

Service Provider;

(n)           Option Commitment means the notice of grant of an Option delivered by the Company to a Service Provider and substantially in the form of the attached Schedule A;

(o)           Optioned Shares means Common Shares subject to an Option;

(p)           Optionee means an individual to whom an Option is granted by the Company under the Share Option Plan;

(q)           Outstanding Issue means the number of Common Shares actually outstanding at the time of calculation (on a non-diluted basis);

(r)           Plan Shares means at the time of determination, the total number of Common Shares which may be reserved for issuance as Optioned Shares under the Plan;

(s)           Regulatory Authority means any securities regulatory authority having acknowledged and undisputed legal jurisdiction over the securities of the Company, and as of the date first above written there are no securities regulatory authorities with jurisdiction over the Plan;

(t)           Retired means

   (i)           with respect to an Officer or Employee, the early or normal retirement of the Officer or Employee, after attainment of age 65, and

   (ii)          with respect to a Director, cessation of office as a Director, other than by reason of death, after attainment of age 70;

(u)           Service Provider means a Director, Officer, Employee, or Consultant of the Company;

(v)           Stock Market has the meaning set out in section 2.12 herein;

(w)           Totally Disabled with respect to an Employee or Officer, means that, solely because of disease or injury the Employee or Officer is deemed by a qualified physician selected by the Company to be unable to work at any occupation which the Employee or Officer is reasonably qualified to perform and, with respect to a Director, means that, solely because of disease or injury, the Director is deemed by a qualified physician

  

  

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selected by the Company to be unable to carry out his or her responsibilities on the Board.

Interpretation

1.3                      In this Share Option Plan, except as otherwise expressly provided or as the context otherwise requires,

(a)           headings are solely for convenience of reference and are not intended to be complete or accurate descriptions of content or to be guides to interpretation of this Share Option Plan or any part of it,

(b)           the word "including", when following a general statement or term, is not to be construed as limiting the general statement or term to any specific item or matter set forth or to similar items or matters, but rather as permitting the general statement or term to refer also to all other items or matters that could reasonably fall within its broadest possible scope,

(c)           an accounting term not otherwise defined herein has the meaning assigned to it, and every calculation to be made hereunder is to be made, in accordance with accounting principles generally accepted in the United States applied on a consistent basis,

(d)           a reference to currency means the lawful currency of the United States;

(e)           a reference to a statute includes all regulations made under it, all amendments to the statute or regulations in force from time to time, and every statute or regulation that supplements or supersedes such statute or regulations,

(f)           a reference to an entity includes any successor to that entity,

(g)           a word importing the masculine gender includes the feminine and neuter, a word in the singular includes the plural, a word importing a corporate entity includes an individual, and vice versa, and

(h)           a reference to "approval", "authorization" or "consent" means written approval, authorization or consent.

PART 2

SHARE OPTION PLAN

Establishment of Share Option Plan

2.1                      This Share Option Plan is hereby established to recognize contributions made by Service Providers and to create an incentive for their continuing relationship with the Company.

  

  

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2.2                      All Common Share options, if any, granted as management or employee incentive options are to be included under the Plan. This Plan replaces any previous such plan.

Eligibility

2.3                      Options to purchase unissued Common Shares may be granted to persons who are or who are deemed to be by the Board, Service Providers, from time to time, by the Board.

Incorporation of Terms of Plan

2.4                      Subject to specific variations approved by the Board, all terms and conditions set out in the Plan or in the Option Commitment will be incorporated into and deemed to form part of an Option.

Maximum Shares to be Allotted

2.5                      The maximum aggregate number of  Plan Shares that may be reserved for issuance under the Plan at any point in time, is 30% of the Outstanding Issue at the time such Plan Shares are reserved for issuance as a result of a grant of a share option under the Plan, less any Optioned Shares already reserved for issuance under outstanding Options previously granted, provided that the total number of Optioned Shares that may be issued pursuant to Code Stock Options (as defined in Part 5) may not exceed 1,515,000.

Shares Not Acquired

2.6                      Any Common Shares not acquired under an Option, which has expired or been surrendered, cancelled or terminated may be made the subject of a subsequent Option pursuant to the provisions of this Plan.

Powers of the Board

2.7                      The Board will be responsible for the general administration of the Plan and the proper execution of its provisions, the interpretation of the Plan and the determination of all questions arising under it.  Without limiting the generality of the foregoing, the Board has the power to

(a)           grant Options,

(b)           allot Common Shares for issuance in connection with the exercise of Options,

(c)           amend, suspend, terminate or discontinue this Plan, or revoke or alter any action taken, except that no amendment or suspension of this Plan will, without the written consent of any Optionees affected, alter or impair any Option granted under this Plan,

(d)           delegate all or such portion of its powers as it may determine to a Compensation Committee of the Board, including the power to grant Options and allot Common Shares for issuance on the exercise of Options, either indefinitely or for such period of time as it may specify, and then such committee may exercise the powers and discharge the duties

  

  

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of the Board in respect of the Plan so delegated to the same extent as the Board is hereby authorized so to do, and

(e)           may in its sole discretion reduce the benefits that may be granted to Service Providers under this Plan before Options are granted to such Service Providers but may not increase any benefits beyond the provisions of this Plan, in connection  with an Option, either before or after the grant of Option without further shareholders' approval.

Amendments or Restrictions as a Result of an IPO or Stock Market Requirement

2.8                      If, as a condition of approving an IPO a Regulatory Authority or a Stock Market (as defined below), requires in writing amendments to any provision in the Plan, an increase in the Exercise Price of a previously granted Option or an amendment of the term of an Option, such amendments will be made without the necessity of obtaining shareholder approval or approval of the holder of such Option but shall require notice to the holder and the right to exercise the Option as herein provided.

2.9                      In the case of an increase in the Exercise Price of an Option, the Exercise Price will be increased to an amount required by such Regulatory Authority but no increase will take effect unless the Optionee has received notice of this requirement and has had a 10-day period to exercise the outstanding Options in the manner described in section 2.12.  The effective date of such increase will be a day determined by the Company that is at least 10 business days before the expected date of completion of the IPO.  The Company will provide to an Optionee a written notice of the effective date of the increase in Exercise Price resulting from the operation of this section as soon as reasonably practicable after it receives a notice from the Regulatory Authority that the Exercise Price must be increased.

2.10                    Optioned Shares issued prior to the IPO Date may be subject to a pooling or escrow agreement, the terms of which will restrict all resales of such Optioned Shares for a period which may exceed one year from the date (the "Receipt Date") that the Company obtains a receipt for a final prospectus filed in respect of its IPO, and each Optionee agrees to execute and comply with the terms of such agreement if required by the Regulatory Authorities, Stock Market or the underwriters for the Company IPO, provided such requirements apply substantially rateably to all holders of Options.

2.11                    Each Optionee hereby irrevocably nominates, constitutes and appoints the President of the Company, with full power of substitution, as such Optionee's agent and true and lawful attorney to act on its behalf with full power and authority in its name, place and stead to execute and deliver as and when required any and all documents which may be necessary or desirable for the Company to be signed by the Optionee in connection  with any pooling agreement or escrow agreement required by the Regulatory Authorities or the underwriters for the Company's IPO in respect of Optioned Shares issued on exercise of Options.  This power of attorney is irrevocable and is a power coupled with an interest and shall survive the disability of any Optionee or the assignment by a Optionee of any of its involvement, and extends to the heirs, executors, administrators and other legal representative and successors and assigns of such Optionee and shall survive the death of such Optionee until written notice of such death is delivered to the Company.

  

  

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2.12                    In circumstances  where the Board passes a resolution authorizing the Company to make application to have the Company's common shares listed for trading on any recognized North American stock exchange, quotation, over-the-counter or similar market  (each a "Stock Market") and the Stock Market or other Regulatory Authority has advised the Company that some or all of the Options must be cancelled, repriced upwards, be amended as to the term, or otherwise revised before the Company's common shares can be listed, the Company shall so notify the Optionees in writing (the "Listing Notice").  The Optionees will have 10 days following receipt or deemed receipt of the Listing Notice to exercise the Options to the extent that they were entitled to exercise them as of the date prior to the listing application, failing which the Options shall be deemed to have been amended in accordance with the requirements of the Stock Market or Regulatory Authority, as the case may be. The Company shall not be required to compensate an Option holder in any way as a consequence of the requirement to effect a change to such holder's Option in accordance with the direction of a Stock Market or Regulatory Authority.

PART 3

TERMS AND CONDITIONS OF OPTIONS

Exercise Price

3.1                      The Exercise Price per Optioned Share will be determined at the discretion of the

Board, and may be at a discount to the prevailing price of the Common Shares not to exceed

15%, however when the Common Shares are listed on a Stock Market, a discount shall only be allowed where permitted by the rules of the Stock Market. Code Stock Options may not be granted at a discount to the market.

3.2                      Notwithstanding section 3.1, the Exercise Price for Options granted under this Plan during the two months prior to the IPO Date will be equal to the price at which Common Shares are expected to be offered for sale under the IPO.

Term of Options

3.3                      The term of an Option will be for a period after the Effective Date not exceeding ten years. The Board will determine the term of the Option at the time it is granted.

Resale

3.4                      All Options are issued subject to applicable securities laws in Canada and the United States and are subject to resale restriction and hold periods in accordance with applicable securities legislation.

3.5                      If the Company's Common Shares become listed on any Stock Market, the Options will also be subject to the rules of that Stock Market.  Nothing in this Plan shall be construed as obligating the Company to seek a Stock Market listing, or to qualify for resale, or register the Options under any securities laws.

  

  

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3.6                      The Company is authorized to affix any resale restriction legend deemed by it to be necessary or desirable in connection with ensuring compliance with such resale

Vesting of Option Rights

3.7                      The vesting periods for all Options granted pursuant to this Plan will be determined at the discretion of the Board at the time of the grant.  In the event of the sale of all or substantially of the outstanding shares or all of the assets of the Company to a third party, or a merger into a successor company which is at least twice as large as the Company by capitalization, all granted but unvested options will immediately become fully vested, unless otherwise specified in any other agreement or the Option Commitment.

Limitation on Right to Exercise

3.8                      No Option may be exercised after the time at which the Optionee ceases to be a Service Provider, except as follows:

(a)           if the Optionee dies, the personal representative of the Optionee may exercise the Options belonging to the Optionee from time to time, to the extent to which the Optionee could have exercised the same at the time of their death, no later than the earlier of the Expiry Date and one year after the Optionee dies;

(b)           if the Optionee is Retired or becomes Totally Disabled, the Optionee may exercise their Options from time to time, to the extent to which the Optionee could have exercised the same at the time of their Retirement or becoming Totally Disabled, no later than the earlier of the Expiry Date and one year after the Optionee is Retired or becomes Totally Disabled;

(c)           if the Optionee ceases to be a Service Provider, otherwise than by reason of, as applicable, a termination of office or employment for cause or for a breach of contract, then the Option may be exercised by the Optionee, within 90 days after the date the Optionee ceases to be a Service Provider, unless the Board resolves to permit a longer period for exercise; or

(d)           the Board in its sole discretion otherwise determines. Options are Non-Assignable and Non-Transferable

3.9                      Subject to section 3.7, an Option will be exercisable only by the Optionee to whom it is granted and will not be assignable or transferable. Adjustment  of the Number of Optioned Shares

3.10                    The number of Common Shares issuable on exercise of an Option will be adjusted as follows:

(a)           in the event of a subdivision of Common Shares from the date of the Plan, at any time while an Option is in effect, into a greater number of Common Shares, the Company

  

  

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will deliver at the time of purchase of Optioned Shares, in addition to the number of Optioned Shares in respect of which the right to purchase is then being exercised, such additional number of Common Shares as result from the subdivision  without an Optionee making any additional payment or giving any other consideration,

(b)           in the event of a consolidation of the Common Shares from the date of the Plan, at any time while an Option is in effect, into a lesser number of Common Shares, the Company will deliver and an Optionee will accept, at the time of purchase of Optioned Shares, in lieu of the number of Optioned Shares in respect of which the right to purchase is then being exercised, the lesser number of Common Shares as result from the consolidation without an Optionee making any lesser payment or receiving any other consideration,

(c)           in the event of any change of the Common Shares in class or in type from the date of the Plan, at any time while an Option is in effect, the Company will deliver at the time of purchase of Optioned Shares, the number of shares of the appropriate class or type resulting from the change that the Optionee would have been entitled to receive if the Optionee had exercised their Options immediately prior to such change in class or type,

(d)           in the event of a capital reorganization, reclassification or change of outstanding equity shares (other than a change in the par value thereof) of the Company, a consolidation, merger, arrangement or amalgamation, or a sale of substantially all the property of the Company at any time while an Option is in effect, an Optionee will have the right to purchase, in lieu of the Optioned Shares receivable upon the exercise of the Option, the kind and amount of securities and property receivable equal to the number of Optioned Shares that would have been received if the Optionee had exercised their Option immediately  prior to such event.  The subdivision or consolidation  of Common Shares at any time outstanding (whether with or without par value) will not be deemed to be a capital reorganization  or a reclassification of the capital of the Company for the purposes of this section (d),

(e)           an adjustment will take effect at the time of the event giving rise to the adjustment, and the adjustments provided for in this section are cumulative, and

(f)            the Company is not be required to issue fractional shares in satisfaction of its obligations under the Plan, and any fractional interest in a Common Share that would, except for the provisions of this section (f), be deliverable upon the exercise of an Option will be cancelled and not be deliverable by the Company.

PART 4

PROCEDURE

Option Commitment

4.1                      When an Option is granted under the Plan, the Chief Executive Officer of the Company or his appointee, will deliver to the Optionee an Option Commitment  detailing the

  

  

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terms of his or her Option, and upon delivery the Service Provider will be a participant in the Plan and will have the right to purchase the Optioned Shares at the Exercise Price.

4.2                      Upon the occurrence of an event to which section 3.9 applies, the Chief Executive Officer of the Company or his appointee, may, and if so directed by the Board will, deliver to any Optionee with respect to any Option a revised Option Commitment, identified as such, with respect to shares as to which the Option has not been exercised, reflecting the application of section 3.9.

Manner of Exercise

4.3                      An Optionee who wishes to exercise his Option may do so by delivering:

(a)           a written notice to the Company specifying the number of Optioned Shares being acquired pursuant to the Option, and

(b)           cash or a certified cheque payable to the Company for the aggregate Exercise Price for the Optioned Shares being acquired.

Delivery of Certificate

4.4                      Not later than five days after receipt of the notice of exercise described in section 4.3 and payment in full for the Optioned Shares being acquired, the Company will issue or direct its transfer agent to issue a certificate to the Optionee for the appropriate number of Optioned Shares.

PART 5

U.S. PARTICIPANTS

Definitions

5.1                      In this Part 5:

(a)           10% Shareholder means any person who owns, taking into account the constructive ownership rules set forth in section 424(d) of the Code, more than 10% of the total combined voting power of all classes of stock of the Company (or of any parent or Subsidiary);

(b)           Code means the U.S. Internal Revenue Code of 1986, as amended;

(c)           Code Stock Option means an Option to purchase Common Shares with the intention that such Option qualify as an "incentive stock option" as that term is defined in section 422 of the Code;

(d)           Employee means a person who is an employee of the Company or a Subsidiary for purposes of section 422 of the Code;

  

  

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(e)           Subsidiary means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each corporation  (other than the last corporation) in such chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  The preceding definition of the term "Subsidiary" is intended to comply with, and will be interpreted consistently  with, section 424(f) of the Code; and

(f)            U.S. Participant means an Optionee who is a U.S. citizen or a U.S. resident, in each case as defined in the Code.

Maximum Number of Common Shares for Code Stock Options

5.2                      Notwithstanding any other provision of this Plan to the contrary, the maximum aggregate number of  Plan Shares that may be reserved for issuance under the Plan at any point in time, is 30% of the Outstanding Issue at the time such Plan Shares are reserved for issuance as a result of a grant of an Option under the Plan, less any Optioned Shares already reserved for issuance under outstanding Options previously granted, subject to 422 and 424 of the Code, provided that the total number of Optioned Shares that may be issued pursuant to Code Stock Options may not exceed 1,515,000.

Designation of Options

5.3                      The Option Commitment issued in respect of an Option will identify if the Options are Code Stock Options.  If no such specification is made in the Option Commitment, the Option will not be a Code Stock Option.

Special Requirements for Code Stock Options

5.4              In addition to the other terms and conditions of this Plan, the following limitations and requirements will apply to a Code Stock Option:

(a)           A Code Stock Option may only be granted to an Employee of the Company or one its subsidiary corporations.   For purposes of this section (a), "subsidiary corporation" will have the meaning attributed to that term for purposes of Section 422 of the Code;

(b)           The aggregate fair market value of the Optioned Shares (determined as of the date of grant of the Option) with respect to which Code Stock Options are exercisable for the first time by any U.S. Participant during any calendar year (pursuant to this Plan and all other Share Compensation Arrangements of the Company or Subsidiary) will not exceed U.S.$100,000 or any other limitation subsequently set forth in section 422(d) of the Code;

(c)           The Exercise Price per Optioned Share payable upon exercise of a Code Stock Option granted to a U.S. Participant who is a 10% Shareholder on the date of grant of the Option will be not less than 110% of the Exercise Price provided for in section 3.1 and

3.2;

(d)           No Code Stock Option may be granted unless the shareholders approve this Plan within 12 months of its adoption by the Board;

  

  

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(e)           A Code Stock Option will terminate and no longer be exercisable  no later than I 0 years after the date of grant of such Code Stock Option; provided, however, that a Code Stock Option granted to a U.S. Participant who is a I 0% Shareholder  on the applicable date of grant will terminate and no longer be exercisable no later than five years after the applicable grant date;

(f)            No Code Stock Option may be granted later than 10 years after the date the Company adopted this Plan; and

(g)           Any Option that is designated as a Code Stock Option but does not satisfy the requirements applicable to a Code Stock Option will be deemed to not be a Code Stock Option.

Amendment Code Stock Option

5.5                      In the case of Code Stock Options, the Board will obtain shareholder approval of a Plan amendment to the extent required by section 422 of the Code, and any change or adjustment to an outstanding Code Stock Option will not, without the consent of the Optionee, be made in such a manner so as to constitute a "modification" that would cause such Code Stock Option to fail to qualify as a Code Stock Option.

U.S. Tax Withholding

5.6                      In order to comply with all applicable U.S. federal and state income tax laws and regulations, the Company may take such action as it deems appropriate to ensure that all applicable U.S. federal and state payroll, withholding, income or other taxes are withheld or collected from such U.S. Participant.  For the purposes of assisting a U.S. Participant in paying all or a portion of the U.S. federal and state taxes to be withheld or collected  upon exercise of an Option, the Board, in its discretion and subject to such additional terms and conditions as it may adopt, may permit a U.S. Participant to satisfy such tax obligation by (a) electing to have the Company withhold a portion of the shares otherwise to be delivered upon exercise of such Option having a fair market value equal to the amount of such taxes (b) delivering to the Company shares (other than Optioned Shares issuable upon exercise of such Option) having a fair market value equal to the amount of such taxes, or (c) remitting cash or a cheque payable to the Company.  The election, if any, must be made on or before the date that the amount of tax to be withheld is determined.

Additional U.S. Tax Requirements

5.7                      Options issued to U.S. Participants are intended to satisfy Section 409A of the Code by satisfying an applicable exemption, which requires (in part) that the Exercise Price be no less than the fair market value of the underlying Optioned Shares, determined as of the date the Option is granted, regardless of whether the Option is intended as a Code Stock Option.  The Company reserves the right to amend any Option (with or without consent from the Optionee) to the extent necessary to comply with Section 409A of the Code or an applicable exemption, including (but not limited to) an amendment that adjusts the Exercise Price for the Option.

  

  

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PART 6

GENERAL

Transferability

6.1                      The benefits, rights and options accruing to any Optionee under any of the Plan will not be transferable by any Optionee other than in the manner provided for in this Plan. During the lifetime of an Optionee, all benefits, rights and options may only be exercised by the Optionee or by his guardian or legal representative.

Employment and Services

6.2                      Nothing contained in this Plan will confer upon any Optionee any right with respect to employment or provision of services with the Company, or interfere in any way with the right of the Company to terminate the Optionee's employment or service at any time. Participation in this Plan by an Optionee will be voluntary.

No Representation or Warranty

6.3                      The Company makes no representation or warranty as to the future market value of Common Shares issued in accordance with the provisions of the Plan.

Governing Law

6.4                      This Plan will be governed and construed in accordance with the laws of the State of California applicable therein.

Amendment of the Plan

6.5                      The Board reserves the right, in its absolute discretion, to at any time amend, modify or terminate this Plan without shareholder approval.  Any amendment to any provision

of this Plan will be subject to any necessary approvals by any regulatory body having jurisdiction

over the securities of the Company.

Notice

6.6                      Each notice, demand or communication required or permitted to be given under this Plan will be in writing and will be delivered to the person to whom it is addressed, and the date of delivery of such notice, demand or communication will be the date of receipt by the addressee.

Date adopted by Board:                                           January 25, 2008.

  

  

  

SCHEDULE A

The Innes Group, Inc.

SHARE OPTION PLAN

[insert date]

OPTION COMMITMENT

Notice is hereby given that, effective this ____ day of _______________, ______ (the "Effective Date") The Innes Group, Inc. (the "Company") has granted

to __________________________, an Option [or Code Stock Option] to acquire

_____________ Common Shares ("Optioned Shares") up to 5:00 p.m. Pacific time on the ____

day of _______________, ______, (the "Expiry Date") at a Exercise Price of US$__________ per share. Optioned Shares may be acquired as follows:

[insert vesting provisions if applicable]

The grant of the Option [or Code Option] evidenced hereby is made subject to the terms and conditions of the Company's Share Option Plan, the terms and conditions of which are hereby incorporated in this Option Commitment.

To exercise your Option [or Code Option] deliver to the Company at its then principal business office, a written notice specifying the number of Optioned Shares you wish to acquire, together with cash or a certified cheque payable to the Company for the aggregate Exercise Price.  A certificate for the Optioned Shares so acquired will be issued by the transfer agent as soon as practicable.

The Innes Group, Inc.

__________________________________

President

I hereby acknowledge receipt of a copy of the Plan and agree to be bound by the terms of Plan. This commitment supersedes any prior Option or commitment made to me.

OPTIONEE

_____________________________________

Name:              _________________________

Print Name:      _________________________

    (signature)

Address:           _________________________

_________________________Exhibit 4.1

FORM OF COMMON STOCK PURCHASE WARRANT

 

oculus
innovative sciences, inc.

No. ___________

	Warrant Shares: _______	Initial Exercise Date: October ___, 2012
	 	Issue Date: April __, 2012

 

THIS COMMON STOCK
PURCHASE WARRANT (the “Warrant”) certifies that, for value received, _____________ or its assigns (the “Holder”)
is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on
or after October __, 2012 (the “Initial Exercise Date”) and on or prior to the close of business on October
__, 2014 (the “Termination Date”) but not thereafter, to subscribe for and purchase from Oculus Innovative Sciences,
Inc., a Delaware corporation (the “Company”), up to ______ shares (as subject to adjustment hereunder, the “Warrant
Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise
Price, as defined in Section 2(b).

Section 1.Definitions.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement
(the “Purchase Agreement”), dated April 22, 2012, among the Company and the purchasers signatory thereto.

Section 2.Exercise.

a)Exercise
of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial
Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company
as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company)
of a duly executed copy of the Notice of Exercise Form annexed hereto sent by facsimile or as a scanned e-mail attachment to the
e-mail address provided by the Company to the Holder and no notarization, medallion stamp guarantee, guarantee or other requirement
shall be required of the Holder to effect exercises of the Warrant hereunder. Within three (3) Trading Days following the date
of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice
of Exercise by wire transfer or cashier’s check drawn on a United States bank unless the cashless exercise procedure specified
in Section 2(c) below is specified in the applicable Notice of Exercise. Notwithstanding anything herein to the contrary, the
Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant
Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant
to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company.
Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder
shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable
number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased
and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise Form within one (1) Business
Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason
of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant
Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

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b)Exercise
Price. The exercise price per share of the Common Stock under this Warrant shall be $1.18, subject to adjustment hereunder
(the “Exercise Price”).

c)Cashless
Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to the Holder, then this Warrant may only be exercised, in whole
or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number
of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

	(A) =		the VWAP on the Trading Day immediately preceding the date on which Holder elects
to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

	(B) =		the Exercise Price of this Warrant, as adjusted hereunder; and

 

	(X) =		the number of Warrant Shares that would be issuable upon exercise of this Warrant
in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

“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 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 listed or 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 OTC Markets, Inc. (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 Holders of a majority in interest of the Warrant Shares then outstanding and reasonably acceptable to the Company, the fees
and expenses of which shall be paid by the Company.

    	2

    	 

    

d)Mechanics
of Exercise.

i.Delivery
of Warrant Shares Upon Exercise. The Company shall use best efforts to cause the Warrant Shares purchased hereunder to be transmitted
by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such
system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of
the Warrant Shares by Holder or (B) this Warrant is being exercised via cashless exercise, and otherwise the Warrant Shares purchased
hereunder shall be transmitted by physical delivery to the address specified by the Holder in the Notice of Exercise by the date
that is one (1) Trading Day after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of this
Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted)
(such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed to have been issued, and
Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for
all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless
exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance
of such shares, having been paid. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a
Notice of Exercise by the second Trading Day following the Warrant Share Delivery Date, the Company shall pay to the Holder, in
cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP
of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $20 per Trading Day on
the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such second Trading Day following
the Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.

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

iii.Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i)
by the second Trading Day following the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

    	3

    	 

    

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

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

vi.Charges,
Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided, however, that in the event Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder
and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental
thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise.

    	4

    	 

    

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

e)Holder’s
Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise
any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after
exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other
Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of
the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common
Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock
which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder
or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of
the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise
analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth
in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section
13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company
is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder
is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained
in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by
the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of
the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant
is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this
Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to
verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above
shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with
the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral
request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares
of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation”
shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares
of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company,
may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership
Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to
the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e)
shall continue to apply. Any such increase or decrease will not be effective until the 61st day after such notice is
delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict
conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this
Warrant.

    	5

    	 

    

Section 3.Certain
Adjustments.

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

b)[Reserved].

c)Subsequent
Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time
the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder
will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase
Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result
in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase
Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Beneficial Ownership Limitation).

d)Pro
Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other
distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of
a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a "Distribution"),
at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution
to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock
acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation,
the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in
such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution
would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate
in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution
to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation). To the extent that this
Warrant has not been partially or completed exercised at the time of such Distribution, such portion of the Distribution shall
be held in abeyance for the benefit of the Holder until the Holder has exercised this Warrant.

    	6

    	 

    
 

e)Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more
related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company,
directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or
substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer,
tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common
Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by
the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related
transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or
property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or
scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of
the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase
agreement or other business combination) or (vi) any “person” or “group” (as these terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall become the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Shares (each a “Fundamental Transaction”), then, upon any
subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been
issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder
(without regard to any limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a
holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental
Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such
exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are
given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be
given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following
such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1)
an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a
Fundamental Transaction involving a person or entity not traded on a national securities exchange, including, but not limited
to, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any Successor
Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days
after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by
paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this
Warrant on the date of the consummation of such Fundamental Transaction. “Black Scholes Value” means the
value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on
Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a
period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the
Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT
function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental
Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being
offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction
and (D) a remaining option time equal to the time between the date of the public announcement of the applicable
Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction
in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the
obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this
Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the
Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to
the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of
such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise
of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction,
and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into
account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the
Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall
refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor
Entity had been named as the Company herein.

    	7

    	 

    

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

g)Notice
to Holder.

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

ii.Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record or
effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common
Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the
date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale,
transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall
not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided
hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company
shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled
to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.

    	8

    	 

    

Section 4.Transfer
of Warrant.

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

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

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

    	9

    	 

    

Section 5.Miscellaneous.

a)No
Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights
as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in
Section 3.

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

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

d)Authorized
Shares.

The Company covenants
that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient
number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant.
The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary Warrant Shares upon the exercise of the purchase
rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares
may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market
upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise
of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment
for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from
all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).

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

    	10

    	 

    

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

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

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

g)Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision
of this Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant,
which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to
cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

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

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

    	11

    	 

    

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

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

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

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

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

 

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

 

(Signature Page Follows)

 

    	12

    	 

    
 

 

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

 

 

	
        oculus innovative sciences,
        inc.

         

         

	
        By:  _________________________

        Name: Robert E. Miller

        Title: Chief Financial Officer

         

 

    	13

    	 

    

 

NOTICE OF EXERCISE

 

To:oculus
innovative sciences, inc. 

 

PORTION OF WARRANT BEING EXERCISED: (check
applicable box or fill in number of Warrant Shares):

 

	 	 	 	 	 
	 	 	
         

        Entire Warrant o
	 	 
	 	 	 	 	 
	 	 	____ Warrant Shares	 	 

 

	ISSUE TO:	_____________________________________________________________________
	 	(Name)
	 	_____________________________________________________________________
	 	(Address, including Zip Code)
	 	_____________________________________________________________________
	 	(Social Security or Tax Identification Number)
	 	 
	DELIVER TO:	_____________________________________________________________________
	 	(Name)
	 	_____________________________________________________________________
	 	(Address, including Zip Code)

 

 

In payment of the purchase price with respect
to this Warrant exercised, the undersigned hereby (A) tenders payment of $___ by (i) certified or bank cashier’s check payable
to the order of the Company o; or (ii) a wire transfer of such funds to an account designated
by the Company o (check applicable box) or (B) hereby provides notice to the Company
that the undersigned is exercising this Warrant pursuant to the cashless exercise as set forth in Section 2(c) of the Warrant.

 

If the number of Warrant Shares hereby exercised
is fewer than all the Warrant Shares represented by this Warrant, the undersigned requests that a new Warrant representing the
number of full Warrant Shares not exercised to be issued and delivered as set forth below:

	 	 	 	 	 

 

	Name of Holder or Assignee:	__________________________________________________________
	 	(Please Print)
	Address, including Zip Code:	 
	 	__________________________________________________________
	 	 
	 	__________________________________________________________

 

The Warrant Shares shall be delivered to the
following DWAC Account Number:

 

	 	_______________________________
	 	 
	 	_______________________________
	 	 
	 	_______________________________

 

Name of Holder: ________________________________________________________________________

Signature of Authorized Signatory of Holder:
__________________________________________________

Name of Authorized Signatory: ___________________________________________________________________

Title of Authorized Signatory: ____________________________________________________________________

Date: _______________________________________________________________________________________

    	14

    	 

    

ASSIGNMENT FORM

 

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

 

 

 

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

 

_______________________________________________
whose address is

 

_______________________________________________________________.

 

 

 

_______________________________________________________________

 

	 	Dated:  ______________, _______

 

 

	 	Holder’s Signature:	_____________________________
	 	 	 
	 	Holder’s Address:	_____________________________
	 	 	 
	 	 	_____________________________

 

 

 

Signature Guaranteed: ___________________________________________

 

 

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

 

 

    	15

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