Document:

exv10w19

 

Exhibit 10.19

EMPLOYMENT AGREEMENT

          THIS EMPLOYMENT AGREEMENT (this “Agreement”) is entered into by and between Mike
Wokasch (the “Executive”), and Oculus Innovative Sciences, Inc., a California corporation
(the “Corporation”), as of June 10, 2006 (the “Effective Date”).

          THE PARTIES ENTER THIS AGREEMENT on the basis of the following facts, understandings and
intentions:

          A. The Corporation desires that the Executive be employed by the Corporation to carry out the
duties and responsibilities described below, all on the terms and conditions hereinafter set forth.

          B. The Executive is willing to accept such employment on such terms and conditions.

          NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and promises of the parties, the
parties hereto agree as follows:

1. Retention and Duties.

     1.1 Retention. The Corporation does hereby hire, engage and employ the Executive for
the Period of Employment (as defined in Section 2) on the terms and conditions expressly set forth
in this Agreement. The Executive does hereby accept and agree to such hiring, engagement and
employment, on the terms and conditions expressly set forth in this Agreement.

     1.2 Duties. During the Period of Employment, the Executive shall serve the
Corporation as its Chief Operating Officer (“COO”). The Executive shall, without limitation and
without limiting the Executive’s other duties to the Corporation, and without limiting the
authority of the Corporation’s Board of Directors (the “Board”), be responsible for the
general supervision, direction and control of the operations of the business and affairs of the
Corporation and have such other duties and responsibilities as the Chief Executive Officer (“CEO”)
shall designate that are consistent with the Executive’s position as COO. The Executive shall
perform all of such duties and responsibilities in accordance with the legal directives of the CEO
and in accordance with the practices and policies of the Corporation as in effect from time to time
throughout the Period of Employment (including, without limitation, the Corporation’s insider
trading and ethics policies, as they may change from time to time). While employed as COO, the
Executive shall report exclusively to the CEO. Throughout the Period of Employment, the Executive
shall not serve on the boards of directors or advisory boards of any other entity unless such
service is expressly approved by the Board and/or CEO.

     1.3 No Other Employment; Minimum Time Commitment. Throughout the Period of
Employment, the Executive shall both (i) devote substantially all of the Executive’s business time,
energy and skill to the performance of the Executive’s duties for the Corporation, and (ii) hold no
other job. The Executive agrees that any investment or direct involvement in, or any appointment
to or continuing service on the board of directors or similar body of, any corporation or other
entity must be first approved in writing by the Corporation. The foregoing provisions of this
Section 1.3 shall not prevent the Executive from investing in any company not listed in the email
from Jim Schutz to the Executive dated 10 June 2006 and to the extent permitted by Section 7(b).
The

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Executive agrees that, as of the Effective Date, (i) to the best of his knowledge, he holds no
investment in and is not directly involved in any corporation or business that reasonably could be
construed as falling outside of the scope of the foregoing permitted investments and involvement,
and (b) he is not a member of any board of directors or similar body of any corporation or other
entity. The Corporation may require the Executive to resign from membership on any board or
similar body of any entity, on which he may now or in the future serve, if the Corporation
determines that the Executive’s membership on such board or similar body interferes (interference
shall include, without limitation, giving rise to conflicts or competitive activity) with the
performance of the Executive’s duties hereunder.

     1.4 No Breach of Contract. The Executive hereby represents to the Corporation that:
(i) the execution and delivery of this Agreement by the Executive and the Corporation and the
performance by the Executive of the Executive’s duties hereunder shall not constitute a breach of,
or otherwise contravene, the terms of any other agreement or policy to which the Executive is a
party or otherwise bound; and (ii) to the best of his knowledge, he is not bound by any
confidentiality, trade secret or similar agreement (other than this Agreement) with any person or
entity referenced in the email from Jim Schutz to the Executive dated 10 June 2006.

     1.5 Location. The Executive acknowledges that the Corporation’s principal executive
offices are currently located in Petaluma, California. The Executive’s principal place of
employment shall be the Corporation’s principal executive offices, as they may be moved from time
to time upon mutual agreement by the Executive and the Corporation. The Executive agrees that the
Executive will be regularly present at the Corporation’s principal executive offices and that the
Executive may be required to travel from time to time in the course of performing the Executive’s
duties for the Corporation.

2. Period of Employment. The “Period of Employment” shall commence on June 10,
2006, and shall continue until the date of Executive’s termination pursuant to Section 5.

3. Compensation.

     3.1 Base Salary. Effective June 10, 2006 and during the Period of Employment, the
Corporation shall pay to the Executive a base salary at the rate of $200,000 per year, subject to
increase (but not decrease) by the CEO (the “Base Salary”). The Executive’s Base Salary
shall be paid in accordance with the Corporation’s regular payroll practices in effect from time to
time, but not less frequently than in monthly installments.

     3.2 Stock Awards. Upon approval of the Board of Directors, the Company will grant the
Executive options to purchase an aggregate of five hundred thousand (500,000) shares of common
stock, at a per share exercise price equal to the fair market value of a share of the Company’s
common stock on the date of grant, as determined by the Board of Directors, subject to a five (5)
year vesting schedule (which provides for vesting of 100,000 options on the first anniversary of
this Agreement and 8,333 1/3 options on the last day of each month following the first anniversary
of this Agreement), and expiring ten (10) years from the date of the option grant and issuance.
Further information regarding this option grant will be provided to you under a separate document.
Additional option grants may be approved at the discretion of the Company. Please, note that the
Company is a privately held California “C” corporation and its shares are not publicly traded on
any exchange.

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     3.3 Bonus. The Executive shall receive an annual bonus of one hundred
thousand dollars ($100,000) upon meeting certain mutually agreeable annual milestones.

4. Benefits.

     4.1 Health and Welfare. During the Period of Employment, the Executive shall be
entitled to participate in all employee pension and welfare benefit plans and programs made
available by the Corporation to the Corporation’s senior-level employees generally, as such plans
or programs may be in effect from time to time.

     4.2 Reimbursement of Business Expenses. The Executive is authorized to incur
reasonable expenses in carrying out the Executive’s duties for the Corporation under this Agreement
and entitled to reimbursement for all such expenses the Executive incurs during the Period of
Employment in connection with carrying out the Executive’s duties for the Corporation, subject to
the Corporation’s reasonable expense reimbursement policies in effect from time to time. The
Corporation shall reimburse the Executive to the extent required by the preceding sentence.

     4.3 Vacation and Other Leave. During the Period of Employment, the Executive shall
accrue and be entitled to take paid vacation in accordance with the Corporation’s standard vacation
policies in effect from time to time, including the Corporation’s policies regarding vacation
accruals, provided, however, that the Executive shall be entitled to a minimum of three (3) weeks
of paid vacation per year. The Executive shall also be entitled to all other holiday and leave pay
generally available to other employees of the Corporation.

     4.4 Automobile Allowance. During the Period of Employment, the Executive shall
receive six hundred dollars per month as an automobile allowance.

5. Termination.

     5.1 Termination by the Corporation. The Executive’s employment by the Corporation,
and the Period of Employment, may be terminated at any time by the Corporation: (i) with Cause (as
defined in Section 5.5), or (ii) without Cause, or (iii) in the event of the Executive’s death, or
(iv) in the event that the Board determines in good faith that the Executive has a Disability (as
defined in Section 5.5).

     5.2 Termination by the Executive. The Executive’s employment by the Corporation, and
the Period of Employment, may be terminated at any time by the Executive, on no less than thirty
(30) days prior written notice to the Corporation.

     5.3 Benefits Upon Termination. If the Executive’s employment by the Corporation is
terminated during the Period of Employment for any reason by the Corporation or by the Executive,
the Corporation shall have no further obligation to make or provide to the Executive, and the
Executive shall have no further right to receive or obtain from the Corporation, any payments or
benefits except:

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          (a) the Corporation shall pay the Executive (or, in the event of his death, the Executive’s
estate) any Accrued Obligations (as defined in Section 5.5); and

          (b) if, during the Period of Employment, the Executive’s employment is terminated by the
Corporation without Cause or by the Executive for Good Reason (as defined in Section 5.5) (and, in
each case, other than due to either the Executive’s death, or a good faith determination by the
Board that the Executive has a Disability):

     (i) the Corporation shall, subject to the conditions set forth in Section
5.3(c), also pay the Executive a lump sum severance benefit equal to twelve (12)
times the monthly Base Salary paid to the Executive during the calendar month
immediately preceding the month in which the termination of the Executive’s
employment occurs. Subject to the conditions set forth in Section 5.3(c), such
lump sum amount shall be paid to the Executive (without interest) no later than
seven (7) days following the date on which the Executive’s employment by the
Corporation terminates;

     (ii) the Corporation shall, subject to the conditions set forth in Section
5.3(c), pay as a severance benefit one hundred percent (100%) of the Executive’s
premiums under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”)
for the same or reasonably equivalent medical coverage as in effect on the date the
Executive’s employment terminated for a period not to exceed the lesser of one year
following the date of such termination or until the Executive becomes eligible for
medical insurance coverage provided by another employer; and

     (iii) as of the date the Executive’s employment terminates, any and all stock
options, stock appreciation rights, restricted stock awards, and similar equity and
equity-based awards granted by the Corporation to the Executive outstanding
immediately prior to such termination of employment shall thereupon be deemed fully
vested and shall be exercisable for a period of no less than twelve (12) months
thereafter or until the stated expiration date for such option or award at the end
of its maximum term, whichever is earlier.

          (c) Any obligation of the Corporation pursuant to Section 5.3(b) to pay a severance benefit in
the circumstances described therein is further subject to the following two conditions precedent:
(i) such severance obligation shall be paid only if the Executive has remained in compliance with
all of the provisions of Section 5.6 and Sections 7 through 12, and such obligation shall terminate
immediately if the Executive is for any reason not in compliance with one or more of the provisions
of Section 5.6, and Sections 7 through 12; and (ii) the Executive’s satisfaction of the release
obligations set forth in Section 5.4. For purposes of the preceding sentence, if the Executive is
not in compliance with one or more provisions of Section 5.6, and Sections 7 though 12, and a cure
is reasonably possible in the circumstances, the Executive will not be deemed to have breached such
provision(s) unless the Executive is given notice and a reasonable opportunity (in no case shall
more than a 10-day cure period be required) to cure such breach and such breach is not cured within
such time period. The parties agree that a cure will not be reasonably possible in all
circumstances including, without limitation, a material breach of confidentiality or similar
occurrence.

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          (d) Except as expressly provided herein, the foregoing provisions of this Section 5.3 shall
not affect: (i) the Executive’s receipt of benefits otherwise due terminated employees under group
insurance coverage consistent with the terms of the applicable Corporation welfare benefit plan;
(ii) the Executive’s rights under COBRA to continue participation in medical, dental,
hospitalization and life insurance coverage; (iii) the Executive’s receipt of benefits otherwise
due in accordance with the terms of the Corporation’s 401(k) plan (if any); or (iv) any rights that
the Executive may have under and with respect to a stock option, stock appreciation right,
restricted stock award, or similar equity or equity-based award, to the extent that such award was
granted before the date that the Executive’s employment by the Corporation terminates and to the
extent expressly provided in the written agreement evidencing such award.

     5.4 Release; Exclusive Remedy.

          (a) This Section 5.4 shall apply notwithstanding anything else contained in this Agreement to
the contrary. As a condition precedent to any Corporation obligation to the Executive pursuant to
Section 5.3(b), the Executive shall, upon or promptly following his last day of employment with the
Corporation, provide the Corporation with a valid, executed, written Mutual Release (as defined in
Section 5.5) (in a form provided by the Corporation) and such release shall have not been revoked
by the Executive pursuant to any revocation rights afforded by applicable law. The Corporation
shall have no obligation to make any payment to the Executive pursuant to Section 5.3(b) unless and
until the Mutual Release contemplated by this Section 5.4 becomes irrevocable by the Executive in
accordance with all applicable laws, rules and regulations.

          (b) The Executive agrees that the payments contemplated by Section 5.3 shall constitute the
exclusive and sole remedy for any termination of his employment and the Executive covenants not to
assert or pursue any other remedies, at law or in equity, with respect to any termination of
employment. The Corporation and Executive acknowledge and agree that there is no duty of the
Executive to mitigate damages under this Agreement. All amounts paid to the Executive pursuant to
Section 5.3 shall be paid without regard to whether the Executive has taken or takes actions to
mitigate damages.

5.5 Certain Defined Terms.

          (a) As used herein, “Accrued Obligations” means:

     (i) any Base Salary that had accrued but had not been paid (including accrued
and unpaid vacation time) prior to the date of termination; and

     (ii) any reimbursement due to the Executive pursuant to Section 4.2 for
expenses incurred by the Executive prior to the date the Period of Employment
terminates.

          (b) As used herein, “Cause” shall mean the reasonable and good faith determination by
a majority of the Board based on its reasonable belief at the time, that, during the Period of
Employment, any of the following events or contingencies exists or has occurred:

     (i) the Executive is convicted of, or has pled guilty to, a felony (under the
laws of the United States or any state thereof); or

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     (ii) the Executive has engaged in acts of fraud, material dishonesty or other
acts of willful misconduct in the course of his duties hereunder, unless the
Executive believed in good faith that such acts were in the interests of the
Corporation; or

     (iii) the Executive willfully and repeatedly fails to perform or uphold his
duties under this Agreement; or

     (iv) the Executive willfully and repeatedly fails to comply with the business
strategies mutually agreed upon by the Executive and the CEO.

          Notwithstanding the foregoing, the events referred to in Section 5.5(b)(iii) and (iv)
shall not constitute “Cause” unless, after the Executive is given notice and a reasonable
opportunity (in no case shall more than a 10-day cure period be required) to cure such failure,
such failure has not been cured within such time period, to the satisfaction of the CEO.

          (c) As used herein, “Disability” shall mean a physical or mental impairment which
substantially limits a major life activity of the Executive and which renders the Executive unable
to perform the essential functions of the Executive’s position, even with reasonable accommodation
which does not impose an undue hardship on the Corporation, for ninety (90) days in any consecutive
twelve (12) month period. The Board reserves the right, in good faith, to make the determination
of whether or not a Disability exists for purposes of this Agreement based upon information
supplied by the Executive and/or his medical personnel, as well as information from medical
personnel (or others) selected by the Corporation or its insurers.

          (d) As used herein, “Good Reason” shall mean the occurrence of one or more of the
following without the Executive’s written consent:

     (i) the assignment of the Executive to duties materially inconsistent with the
Executive’s authorities, duties and responsibilities (specifically excluding titles
and reporting requirements) as Chief Operating Officer of the Corporation; a
material reduction or alteration in the nature or status of the Executive’s
authorities, duties or responsibilities, other than an insubstantial and inadvertent
act that is remedied by the Corporation promptly after receipt of notice thereof
given by the Executive; or a relocation of the Corporation’s principal executive
offices to a place more than fifty (50) miles from Petaluma, California.

     (ii) a reduction by the Corporation in the Executive’s Base Salary as in effect
on the Effective Date or as the same shall be increased from time to time, or the
Corporation otherwise fails to satisfy its compensation obligations to the Executive
under this Agreement, after notice by the Executive and a reasonable opportunity to
cure; or

     (iii) the failure of the Corporation to obtain a satisfactory agreement from
any successor to the Corporation relating to the Executive’s employment by such
successor.

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          provided, however, that none of the events specified in clause (i), (ii), or
(iii) above shall constitute Good Reason unless the Executive shall have notified the Corporation
in writing describing the events which constitute Good Reason and the Corporation shall have failed
to cure such event within a reasonable period, not to exceed ten (10) days, after the Corporation’s
actual receipt of such written notice.

          (e) As used herein, “Mutual Release” shall mean a written release, discharge and
covenant not to sue entered into by (i) the Corporation on behalf of itself, its parent (if any),
its subsidiaries and affiliates, its assigns and successors, and each of them, of and in favor of
the Executive, his descendants, dependents, heirs, executors, administrators, assigns, and
successors, and each of them (the “releasees”), with respect to and from any and all claims,
demands, rights, liens, agreements, contracts, covenants, actions, suits, causes of action,
obligations, debts, costs, expenses, attorneys’ fees, damages, judgments, orders and liabilities of
whatever kind or nature in law, equity or otherwise, whether now known or unknown, suspected or
unsuspected, and whether or not concealed or hidden, which it may then own or hold or it at any
time theretofore owned or held or may in the future hold against any or all of said releasees,
arising out of or in any way connected with the Executive’s employment relationship with each
and every member of the Company Group (as defined in Section 7) with which the Executive has
had such a relationship, or the termination of his employment or any other transactions,
occurrences, acts or omissions or any loss, damage or injury whatever, known or unknown, suspected
or unsuspected, resulting from any act or omission by or on the part of said releasees, or any of
them, committed or omitted prior to the date of such release, and (ii) the Executive on behalf of
himself, his descendants, dependents, heirs, executors, administrators, assigns, and successors,
and each of them, of any in favor of the Corporation, its parent (if any), the Corporation’s
subsidiaries and affiliates, past and present, and each of them, as well as its and their trustees,
directors, officers, agents, attorneys, insurers, employees, shareholders, members,
representatives, assigns, and successors, past and present, and each of them (the “releasees”),
with respect to and from any an all claims, wages, demands, rights, liens, agreements, contracts,
covenants, actions, suits, causes of action, obligations, debts, costs, expenses, attorneys’ fees,
damages, judgments, orders and liabilities of whatever kind or nature in law, equity or otherwise,
whether now known or unknown, suspected or unsuspected, and whether or not concealed or hidden,
which he may then own or hold or he at any time theretofore owned or held or may in the future hold
as against any or all of said releasees, arising out of or in any way connected with the
Executive’s employment relationship with each and every member of the Company Group (as defined in
Section 7) with which the Executive has had such a relationship, or the termination of his
employment or any other transactions, occurrences, acts or omissions or any loss, damage or injury
whatever, known or unknown, suspected or unsuspected, resulting from any act or omission by or on
the part of said releasees, or any of them, committed or omitted prior to the date of such release
including, without limiting the generality of the foregoing, any claim under section 1981 of the
Civil Rights Act of 1866, Title VII of the Civil Rights Act of 1964, the Age Discrimination in
employment Act, the Americans with Disabilities Act, the Family and Medical Leave Act of 1993, the
California Fair Employment and Housing Act, the California Family Rights Act, any other claim under
any other federal, state, or local law or regulation, and any other claim for severance pay, bonus
or incentive pay, sick leave, holiday pay, vacation pay, life insurance, health or medical
insurance or any other fringe benefit, medical expenses, or disability (except that such release
shall not constitute a release of any Corporation obligation to the Executive that may be due to
the Executive pursuant to Section 5.3(b)
 upon the Corporation’s receipt of such release). The
Mutual Release shall also contain the Executive’s warrant that he has not theretofore assigned or
transferred to any person or entity, other than the Corporation, any released matter or any part or
portion

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thereof and that he will defend, indemnify and hold harmless the Corporation and the
Aforementioned releasees from and against any claim (including the payment of attorneys’ fees and
costs actually incurred whether or not litigation is commenced) that is directly or indirectly
based on or in connection with or arising out of any such assignment or transfer made, purported or
claimed.

     5.6 Resignation From Boards. Upon or promptly following any termination of
Executive’s employment with the Corporation, the Executive agrees to resign from (i) each and every
board of directors (or similar body, as the case may be) of the Corporation and each of its
affiliates on which the Executive may then serve (if any), and (ii) each and every office of the
Corporation and each of its affiliates that the Executive may then hold, and all positions that he
may have previously held with the Corporation and any of its affiliates.

     5.7 Excise Tax Gross-Up. During and after the period of Executive’s employment with
the Corporation, Executive shall be entitled to the excise tax protections set forth in Exhibit A
hereto. The preceding sentence takes precedence over any contrary provision (such as, without
limitation, an excise tax cut-back provision) of any other applicable
incentive plan or award
agreement.

6. Means and Effect of Termination. Any termination of the Executive’s employment under
this Agreement shall be communicated by written notice of termination from the terminating party
to the other party. The notice of termination shall indicate the specific provision(s) of this
Agreement relied upon in effecting the termination.

7. Non-Competition. The Executive acknowledges and recognizes the highly competitive
nature of the businesses of the Corporation, the amount of sensitive and confidential information
involved in the discharge of the Executive’s position with the Corporation, and the harm to the
Corporation that would result if such knowledge or expertise was disclosed or made available to a
competitor. Based on that understanding, the Executive hereby expressly agrees as follows:

          (a) As a result of the particular nature of the Executive’s relationship with the Corporation,
in the capacities identified earlier in this Agreement, for the Period of Employment the Executive
hereby agrees that he will not, directly or indirectly, (i) engage in any business for the
Executive’s own account or otherwise derive any personal benefit from any business that competes
with the business of the Corporation or any of its affiliates (the Corporation and its affiliates
are referred to, collectively, as the “Company Group”), (ii) enter the employ of, or render
any services to, any person engaged in any business that competes with the business of any entity
within the Company Group, (iii) acquire a financial interest in any person engaged in any business
that competes with the business of any entity within the Company Group, directly or indirectly, as
an individual, partner, member, shareholder, officer, director, principal, agent, trustee or
consultant, or (iv) interfere with business relationships (whether formed before or after the
Effective Date) between the Corporation, any of its respective affiliates or subsidiaries, and any
customers, suppliers, officers, employees, partners, members or investors of any entity within the
Company Group. For purposes of this Agreement, businesses in competition with the Company Group
shall include, without limitation, businesses which any entity within the Company Group may conduct
operations, and any businesses which any entity within the Company Group has specific plans to
conduct operations in the future and as to which the Executive is aware of such planning, whether
or not such businesses have or have not as of that date commenced operations.

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          (b) Notwithstanding anything to the contrary in this Agreement, the Executive may, directly or
indirectly, own, solely as an investment, securities of any person
which are publicly traded on
a national or regional stock exchange or on an over-the-counter market if the Executive (i) is not
a controlling person of, or a member of a group which controls, such person, and (ii) does not,
directly or indirectly, beneficially own one percent (1%) or more of any class of securities of
such person.

8. Confidentiality. As a material part of the consideration for the Corporation’s
commitment to the terms of this Agreement, the Executive hereby agrees that the Executive will not
at any time (whether during or after the Executive’s employment with the Corporation), other than
in the course of the Executive’s duties hereunder, or unless
compelled by lawful process after
written notice to the Corporation of such notice along with sufficient time for the Corporation
to try and overturn such lawful process, disclose or use for the Executive’s own benefit or
purposes or the benefit or purposes of any other person, firm,
partnership, joint venture,
association, corporation or other business organization, entity or enterprise, any trade secrets,
or other data or information which the Corporation seeks to protect from disclosure to third
parties and which relates to customers, development programs, costs, marketing, trading,
investment, sales activities, promotion, credit and financial data, financing methods, or plans of
any entity within the Company Group; provided, however, that the foregoing shall
not apply to information which (i) is generally known to the industry or the public, other than as
a result of the Executive’s breach of this covenant, (ii) becomes known to the Executive from
a source other than the Corporation and without violation of any obligation of confidentiality
which such source may have, or (iii) is already in the Executive’s possession without restriction
as to disclosure. The Executive further agrees that the Executive will not retain or use for
his account, at any time, any trade names, trademark or other proprietary business designation used
or owned in connection with the business of any entity within the Company Group.

9. Inventions and Developments.

          (a) All inventions, policies, systems, developments or improvements conceived, designed,
implemented and/or made by the Executive, either alone or in conjunction with others, at any time
or at any place during the Period of Employment, whether or not reduced to writing or practice
during such Period of Employment, which directly or indirectly relate to the business of any entity
within the Company Group, or which were developed or made in whole or in part using the facilities
and/or capital of any entity within the Company Group, shall be the sole and exclusive property of
the Company Group. The Executive shall promptly give notice to the Corporation of any such
invention, development, patent or improvement, and shall at the same time, without the need for any
request by any person or entity within the Company Group, assign all of the Executive’s rights to
such invention, development, patent and/or improvement to the Company Group. The Executive shall
sign all instruments necessary for the filing and prosecution of any applications for, or extension
or renewals of, letters patent of the United States or any foreign country that any entity in the
Company Group desires to file.

          (b) All copyrightable work by the Executive during the Period of Employment that relates to
the business of any entity in the Company Group is intended to be “work made for hire” as defined
in Section 101 of the Copyright Act of 1976, and shall be the property of the Company Group. If
the copyright to any such copyrightable work is not the property of the

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Company Group by operation of law, the Executive will, without further consideration, assign
to the Company Group all right, title and interest in such copyrightable work and will assist the
entities in the Company Group and their nominees in every way, at the Company Group’s expense, to
secure, maintain and defend for the Company Group’s benefit copyrights and any extensions and
renewals thereof on any and all such work including translations thereof in any and all countries,
such work to be and to remain the property of the Company Group whether copyrighted or not.

10. Anti-Solicitation. In light of the amount of sensitive and confidential information
involved in the discharge of the Executive’s duties, and the harm to the Corporation that would
result if such knowledge or expertise were disclosed or made available to a competitor, and as a
reasonable step to help protect the confidentiality of such information, the Executive promises and
agrees that during the Period of Employment and for a period of two (2) years thereafter, the
Executive will not, directly or indirectly, individually or as a consultant to, or as an employee,
officer, shareholder, director or other owner or participant in any business, influence or attempt
to influence customers, vendors, suppliers, joint venturers, associates, consultants, agents, or
partners of any entity within the Company Group, either directly or indirectly, to divert their
business away from the Company Group, to any individual, partnership, firm, corporation or other
entity then in competition with the business of any entity within the Company Group, and he will
not otherwise materially interfere with any business relationship of any entity within the Company
Group.

11. Soliciting Employees. In light of the amount of sensitive and confidential information
involved in the discharge of the Executive’s duties, and the harm to the Corporation that would
result if such knowledge or expertise were disclosed or made available to a competitor, and as a
reasonable step to help protect the confidentiality of such information, the Executive promises and
agrees that during the Period of Employment and for a period of two (2) years thereafter, the
Executive will not, directly or indirectly, individually or as a consultant to, or as an employee,
officer, shareholder, director or other owner of or participant in any business, solicit (or assist
in soliciting) any person who is then, or at any time within six (6) months prior thereto was, an
employee of an entity within the Company Group, who earned annually $25,000 or more as an employee
of such entity during the last six (6) months of his or her own employment to work for (as an
employee, consultant or otherwise) any business, individual, partnership, firm, corporation, or
other entity whether or not engaged in competitive business with any entity in the Company Group.

12. Return of Property. The Executive agrees to truthfully and faithfully account for and
deliver to the Corporation all property belonging to the Corporation, any other entity in the
Company Group, or any of their respective affiliates, which the Executive may receive from or on
account of the Corporation, any other entity in the Company Group, or any of their respective
affiliates, and upon the termination of the Period of Employment, or the Corporation’s demand, the
Executive shall immediately deliver to the Corporation all such property belonging to the
Corporation, any other entity in the Company Group, or any of their respective affiliates.

13. Withholding Taxes. Notwithstanding anything else herein to the contrary, the
Corporation may withhold (or cause there to be withheld, as the case may be) from any amounts
otherwise due or payable under or pursuant to this Agreement such federal, state and local income,
employment, or other taxes as may be required to be withheld pursuant to any applicable law or
regulation.

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14. Cooperation in Litigation. The Executive agrees that he will, during the Period of
Employment and for a period of five (5) years thereafter, reasonably cooperate with the
Corporation, subject to his reasonable personal and business schedules, in any litigation which
arises out of events occurring prior to the termination of his employment, including but not
limited to, serving as a witness or consultant and producing documents and information relevant to
the case or helpful to the Corporation. The Corporation agrees to reimburse the Executive for all
reasonable costs and expenses he incurs in connection with his obligations under this Section 14
and, in addition, to reasonably compensate the Executive for time actually spent in connection
therewith following the termination of his employment with the Corporation.

15. Assignment. This Agreement is personal in its nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or any rights or
obligations hereunder; provided, however, that in the event of a merger,
consolidation, or transfer or sale of all or substantially all of the assets of the Corporation
with or to any other individual(s) or entity, this Agreement shall, subject to the provisions
hereof, be binding upon and inure to the benefit of such successor and such successor shall
discharge and perform all the promises, covenants, duties, and obligations of the Corporation
hereunder.

16. Number and Gender. Where the context requires, the singular shall include the plural,
the plural shall include the singular, and any gender shall include all other genders.

17. Section Headings. The section headings of, and titles of paragraphs and subparagraphs
contained in, this Agreement are for the purpose of convenience only, and they neither form a part
of this Agreement nor are they to be used in the construction or interpretation thereof.

18. Governing Law. This Agreement, and all questions relating to its validity,
interpretation, performance and enforcement, as well as the legal relations hereby created between
the parties hereto, shall be governed by and construed under, and interpreted and enforced in
accordance with, the laws of the State of California, notwithstanding any California or other
conflict of law provision to the contrary.

19. Severability. If any provision of this Agreement or the application thereof is held
invalid, the invalidity shall not affect other provisions or applications of this Agreement which
can be given effect without the invalid provisions or applications and to this end the provisions
of this Agreement are declared to be severable.

20. Entire Agreement. This Agreement embodies the entire agreement of the parties hereto
respecting the matters within its scope. This Agreement supersedes all prior and contemporaneous
agreements of the parties hereto that directly or indirectly bears upon the subject matter hereof.
Any prior negotiations, correspondence, agreements, proposals or understandings relating to the
subject matter hereof shall be deemed to have been merged into this Agreement, and to the extent
inconsistent herewith, such negotiations, correspondence, agreements, proposals, or understandings
shall be deemed to be of no force or effect. There are no representations, warranties, or
agreements, whether express or implied, or oral or written, with respect to the subject matter
hereof, except as expressly set forth herein.

Page 11 of 14

 

21. Modifications. This Agreement may not be amended, modified or changed (in whole or in
part), except by a formal, definitive written agreement expressly referring to this Agreement,
which agreement is executed by both of the parties hereto.

22. Waiver. Neither the failure nor any delay on the part of a party to exercise any
right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or of any right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be
effective unless it is in writing and is signed by the party asserted to have granted such waiver.

23. Resolution of Disputes.

          (a) Any controversy arising out of or relating to the Executive’s employment (whether or not
before or after the expiration of the Period of Employment), any termination of the Executive’s
employment, this Agreement or the enforcement or interpretation of this Agreement, or because of an
alleged breach, default, or misrepresentation in connection with any of the provisions of this
Agreement, including (without limitation) any state or federal statutory claims, shall be submitted
to arbitration in Santa Rosa, California, before a sole arbitrator (the “Arbitrator”)
selected from judicial arbitration mediation services (“JAMS”), or if JAMS is no longer
able to supply the arbitrator, such arbitrator shall be selected from the American Arbitration
Association (“AAA”), and shall be conducted in accordance with the provisions of California
Code of Civil Procedure §§ 1280 et seq. as the exclusive remedy of such dispute;
provided, however, that provisional injunctive relief may, but need not, be sought
in a court of law while arbitration proceedings are pending, and any provisional injunctive relief
granted by such court shall remain effective until the matter is finally determined by the
Arbitrator. Final resolution of any dispute through arbitration may include any remedy or relief
that the Arbitrator deems just and equitable, including any and all remedies provided by applicable
state or federal statutes. At the conclusion of the arbitration, the Arbitrator shall issue a
written decision that sets forth the essential findings and conclusions upon which the Arbitrator’s
award or decision is based. Any award or relief granted by the Arbitrator hereunder shall be final
and binding on the parties hereto and may be enforced by any court of competent jurisdiction.

          (b) The parties acknowledge and agree that they are hereby waiving any rights to trial by jury
in any action, proceeding or counterclaim brought by either of the parties against the other in
connection with any matter whatsoever arising out of or in any way connected with any of the
matters referenced in the first sentence of the first paragraph of this Section 23.

          (c) The parties agree that Corporation shall be responsible for payment of the forum costs of
any arbitration hereunder, including the Arbitrator’s fee. The parties further agree that in any
proceeding with respect to such matters, the prevailing party will be entitled to recover its
reasonable attorney’s fees and costs from the non-prevailing party (other than forum costs
associated with the arbitration which in any event shall be paid by the Corporation).

          (d) Without limiting the remedies available to the parties and notwithstanding the foregoing
provisions of this Section 23, the Executive and the Corporation acknowledge that any breach of any
of the covenants or provisions contained in Sections 5.6, and 7 through 12 could

Page 12 of 14

 

result in irreparable injury to either of the parties hereto for which there might be no
adequate remedy at law, and that, in the event of such a breach or threat thereof, the
non-breaching party shall be entitled to obtain a temporary restraining order and/or a preliminary
injunction and a permanent injunction restraining the other party hereto from engaging in any
activities prohibited by any covenant or provision in Sections 5.6, and 7 through 12 or such other
equitable relief as may be required to enforce specifically any of the covenants or provisions of
Sections 5.6, and 7 through 12.

24. Notices.

          (a) All notices, requests, demands and other communications required or permitted under this
Agreement shall be in writing and shall be deemed to have been duly given and made if (i) delivered
by hand, (ii) otherwise delivered against receipt therefore, or (iii) sent by registered or
certified mail, postage prepaid, return receipt requested. Any notice shall be duly addressed to
the parties as follows:

(i) if to the Corporation:

Oculus Innovative Services, Inc.

1129 North McDowell Boulevard

Petaluma, California 94954

Attn: Jim Schutz

Fax: +1 (707) 782 0705

(ii) if to the Executive:

Mike Wokasch

5420 Bremer Road

McFarland, WI 53558

+1 (608) 838-3237

          (b) Any party may alter the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this Section 24 for the
giving of notice. Any communication shall be effective when delivered by hand, when otherwise
delivered against receipt therefore, or five (5) business days after being mailed in accordance
with the foregoing.

25. Legal Counsel; Mutual Drafting. Each party recognizes that this is a legally binding
contract and acknowledges and agrees that they have had the opportunity to consult with legal
counsel of their choice. Each party has cooperated in the drafting, negotiation and preparation of
this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be
construed against either party on the basis of that party being the drafter of such language.

26. Provisions that Survive Termination. The provisions of 5.3, 5.4, 5.5, 5.6, 5.7, 7
through 25, 27, and this Section 26 shall survive any termination of the Period of Employment.

27. Counterparts. This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original as against any party whose signature appears thereon, and all of
which together shall constitute one and the same instrument. This Agreement shall become binding

Page 13 of 14

 

when one or more counterparts hereof, individually or taken together, shall bear the signatures of
all of the parties reflected hereon as the signatories. Photographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.

IN WITNESS WHEREOF, the Corporation and the Executive have executed this Agreement as of the
Effective Date.

	 	 	 	 	 
	 	 	CORPORATION
	 
	 	 	 	 
	 	 	Oculus Innovative Services, Inc.,
a California corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Hoji Alimi
	 

	 	 	 	 
	 	 	Hoji Alimi, CEO and President,
	 	 	Oculus Innovative Sciences, Inc.
	 
	 	 	 	 
	 	 	EXECUTIVE
	 
	 	 	 	 
	 	 	/s/ Mike Wokasch
	 	 	 
	 	 	Mike Wokasch

Page 14 of 14

 

EXHIBIT A — SECTION 5.7 EXCISE TAX GROSS-UP

A.1 Equalization Payment. If any payment, distribution, transfer, or benefit (including,
without limitation, any amounts received or deemed received by the Executive within the meaning of
any provision of the Internal Revenue Code of 1986, as amended (the “Code”), or by the Executive as
a result of (and not by way of limitation) any automatic vesting, lapse of restrictions and/or
accelerated target or performance achievement provisions, or otherwise, applicable to outstanding
grants or awards to the Executive under any of the Corporation’s incentive plans) by the
Corporation or a successor, or by a direct or indirect subsidiary or affiliate of the Corporation
(or any successor or affiliate of any of them, and including any benefit plan of any of them),
whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise (collectively, the “Total Payments”), is or will be subject to the excise tax imposed
under Section 4999 of the Code or any similar or successor tax (the “Excise Tax”), the Corporation
shall pay in cash to Executive or for Executive’s benefit as provided below an additional amount or
amounts (the “Gross-Up Payment(s)”) such that the net amount retained by the Executive after the
deduction of any Excise Tax on such Total Payments and any Federal, state and local income tax and
Excise Tax upon the Gross-Up Payment(s) provided for by this Section B.1 shall be equal to such
Total Payments had they not been subject to the Excise Tax. Such Gross-Up Payment(s) shall be made
by the Corporation to the Executive or to any applicable taxing authority on behalf of the
Executive as soon as practicable following the receipt or deemed receipt of any such Total Payments
by the Executive, and may be satisfied by the Corporation making a payment or payments on the
Executive’s account in lieu of withholding for tax purposes but in all events shall be made within
thirty (30) days of the receipt or deemed receipt by the Executive of any such Total Payment.

A.2 Calculation of Gross-Up Payment. The determination of whether a Gross-Up Payment is
required pursuant to this Exhibit B and the amount of any such Gross-Up Payment shall be determined
in writing (the “Determination”) by a nationally-recognized certified public accounting firm
selected by the Corporation (the “Accounting Firm”). The Accounting Firm shall provide its
Determination in writing, together with detailed supporting calculations and documentation and any
assumptions used in making such computation, to the Corporation and the Executive. In the event of
a termination of the Executive’s employment which reasonably may require the payment of a Gross-Up
Payment or in the event of a Change in Control, such documentation shall be provided no later than
twenty (20) days following such event. Within twenty (20) days following delivery of the
Accounting Firm’s Determination, the Executive shall have the right, at the Corporation’s expense,
to obtain the opinion of an “outside counsel,” which opinion need not be unqualified, which sets
forth: (i) the amount of the Executive’s “annualized includible compensation for the base period”
(as defined in Code Section 280G(d) (1)); (ii) the present value of the Total Payments made to the
Executive; (iii) the amount and present value of any “excess parachute payment;” and (iv) detailed
supporting calculations and documentation and any assumptions used in making such computations.
The opinion of such outside counsel shall be supported by the opinion of a nationally-recognized
certified public accounting firm and, if necessary or required by the Corporation, a firm of
nationally-recognized executive compensation consultants. The Executive shall also have the right
to obtain such an opinion of outside counsel in the event that the Corporation has not timely
submitted the initial determination to the Accounting Firm as provided above (including, without
limitation, in the event that the Corporation does not submit such a determination to the
Accounting Firm following an event in connection with which the Executive reasonably believes that
he may be entitled to a Gross-Up Payment). The outside counsel’s opinion shall be binding upon the
Corporation and the Executive and shall constitute the “Determination”

 

 

for purposes of this Exhibit B instead of the initial determination by the Accounting Firm. The
Corporation shall pay (or, to the extent paid by the Executive, reimburse the Executive for) the
certified public accounting firm’s and, if applicable, the executive compensation consultant’s
reasonable and customary fees for rendering such opinion. For purposes of this Section B.2,
“outside counsel” means a licensed attorney selected by the Executive who is recognized in the
field of executive compensation and has experience with respect to the calculation of the Excise
Tax; provided that the Corporation must approve the Executive’s selection, which approval shall not
be unreasonably withheld.

A.3 Computation Assumptions. For purposes of determining whether any Total Payments will
be subject to Excise Tax, and the amount of any such Excise Tax:

	 	(a)	 	Any other payments, benefits and/or amounts received or to be received by the
Executive in connection with or contingent upon any change in the ownership or
effective control of the Corporation or any change in the ownership of a substantial
portion of the Corporation’s assets or termination of the Executive’s employment
(whether pursuant to the terms of this Agreement or any other plan, arrangement or
agreement with the Corporation, or with any Person whose actions result in such a
change or any Person affiliated with the Corporation or such Persons) shall be combined
to determine whether the Executive has received any “parachute payment” within the
meaning of Section 280G(b)(2) of the Code, and if so, the amount of any “excess
parachute payments” within the meaning of Section 280G(b)(1) that shall be treated as
subject to the Excise Tax, unless in the opinion of the person or firm rendering the
Determination, such other payments, benefits and/or amounts (in whole or in part) do
not constitute parachute payments, or such excess parachute payments represent
reasonable compensation for services actually rendered within the meaning of Section
280G(b)(4) of the Code in excess of the base amount within the meaning of Section
280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax (for purposes of
this Section B.3(a), “Person” shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a
“group” as defined in Section 13(d) thereof);
	 
	 	(b)	 	The value of any non-cash benefits or any deferred payment or benefit shall be
determined by the person or firm rendering the Determination in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code;
	 
	 	(c)	 	The compensation and benefits provided for in Section 5 of this Agreement, and
any other compensation earned prior to the termination of the Executive’s employment
pursuant to the Corporation’s compensation programs (if such payments would have been
made in the future in any event, even though the timing of such payment is triggered by
a change in the ownership or effective control of the Corporation or any change in the
ownership of a substantial portion of the Corporation’s assets or a termination of the
Executive’s employment), shall for purposes of the calculation pursuant to this Section
B.3 be deemed to be reasonable; and
	 
	 	(d)	 	The Executive shall be deemed to pay federal income taxes at the highest
marginal rate of federal income taxation in the calendar year in which the Gross-Up
Payment

 

 

	 	 	 	is to be made. Furthermore, the computation of the Gross-Up Payment shall assume
(and adjust for the fact) that (i) there is a loss of miscellaneous itemized
deductions under Section 67 of the Code (or analogous federal or state provisions)
on account of the Gross-Up Payment and (ii) a loss of itemized deductions under
Section 68 of the Code (or analogous federal or state provisions) on account of the
Gross-Up Payment. The computation of the Gross-Up Payment shall take into account
any reduction in the Gross-Up Payment due to the Executive’s share of the hospital
insurance portion of FICA and any state withholding taxes (other than any state
withholding tax for income tax liability). The computation of the state and local
income taxes applicable to the Gross-Up Payment shall be based on the highest
marginal rate of taxation in the state and locality of the Executive’s residence on
the date the Executive’s employment terminates, and shall take into account the
maximum reduction in federal income taxes that could be obtained from the deduction
of such state and local taxes.

A.4 Executive’s Obligation to Notify Corporation. The Executive shall promptly notify the
Corporation in writing of any claim by the Internal Revenue Service (or any successor thereof) or
any state or local taxing authority (individually or collectively, the “Taxing Authority”) that, if
successful, would require the payment by the Corporation of a Gross-Up Payment in excess of any
Gross-Up Payment as originally set forth in the Determination. If the Corporation notifies the
Executive in writing that it desires to contest such claim, the Executive shall: (a) give the
Corporation any information reasonably requested by the Corporation relating to such claim; (b)
take such action in connection with contesting such claim as the Corporation shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney selected by the Corporation that is reasonably acceptable
to the Executive; (c) cooperate with the Corporation in good faith in order to effectively contest
such claim; and (d) permit the Corporation to participate in any proceedings relating to such
claim; provided that the Corporation shall bear and pay directly all attorneys fees, costs and
expenses (including additional interest, penalties and additions to tax) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for
all taxes (including, without limitation, income and excise taxes), interest, penalties and
additions to tax imposed in relation to such claim and in relation to the payment of such costs and
expenses or indemnification. Without limitation on the foregoing provisions of this Section B.4,
and to the extent its actions do not unreasonably interfere with or prejudice the Executive’s
disputes with the Taxing Authority as to other issues, the Corporation shall control all
proceedings taken in connection with such contest and, in its reasonable discretion, may pursue or
forego any and all administrative appeals, proceedings, hearings and conferences with the Taxing
Authority in respect of such claim and may, at its sole option, either direct Executive to pay the
tax, interest or penalties claimed and sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as
the Corporation shall determine; provided, however, that if the Corporation directs Executive to
pay such claim and sue for a refund, the Corporation shall advance an amount equal to such payment
to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless,
on an after-tax basis, from all taxes (including, without limitation, income and excise taxes),
interest, penalties and additions to tax imposed with respect to such advance or with respect to
any imputed income with respect to such advance, as any such amounts are incurred; and, further,
provided, that any extension of the statute of limitations relating to payment of taxes, interest,
penalties or additions to tax for the taxable year

 

 

of the Executive with respect to which such contested amount is claimed to be due is limited solely
to such contested amount; and, provided, further, that any settlement of any claim shall be
reasonably acceptable to the Executive and the Corporation’s control of the contest shall be
limited to issues with respect to which a Gross-Up Payment would be payable hereunder, and the
Executive shall be entitled to settle or contest, as the case may be, any other issue.

A.5 Subsequent Recalculation. In the event of a binding or uncontested determination by
the Taxing Authority that adjusts the computation set forth in the Determination so that the
Executive did not receive the greatest net benefit required pursuant to Section B.1, the
Corporation shall reimburse the Executive as provided herein for the full amount necessary to place
the Executive in the same after-tax position as he would have been in had no Excise Tax applied.
In the event of a binding or uncontested determination by the Taxing Authority that adjusts the
computation set forth in the Determination so that the Executive received a payment or benefit in
excess of the amount required pursuant to Section B.1, then the Executive shall promptly pay to the
Corporation (without interest) the amount of such excess.exv10w20

 

Exhibit 10.20

DIRECTOR AGREEMENT

     THIS
DIRECTOR AGREEMENT (“Agreement”) is dated for reference
purposes only as of this [___] day
of [___], by and between [___] (the “Director”) and OCULUS INNOVATIVE
SCIENCES, INC., a California corporation (the “Company”), and shall become effective as of
[___] (the “Effective Date”).

     WHEREAS, the Company is engaged in the business of developing innovative medical technologies;

     WHEREAS, as of the Effective Date, the Director will be a duly elected director of the
Company;

     WHEREAS, the Company and the Director desire that the confidentiality obligations of the
Director and the indemnification obligations of the Company be memorialized by this Agreement; and

     WHEREAS, the Company desires that the Director be compensated for his services to the Company
by the granting of options to purchase the stock of the Company on the terms provided herein.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein
contained, the parties hereto agree as follows:

     1. Director Availability. The Director shall make himself reasonably available to
attend the noticed meetings of the Board of Directors of the Company at the Company’s Petaluma
offices, and if not practicable, by telephone conference call. The Director shall make himself
reasonably available to the officers of the Company for purpose of general consultation in
connection with the business of the Company.

     2. Competing Activities. While a director of the Company, the Director shall not
engage in any other employment, occupation, consulting or other business activity that is directly
competitive with the business of the Company.

     3. Covenant Not to Solicit. For the period beginning on the date hereof and ending on
the date one (1) year after the completion or termination of the Director’s engagement with the
Company, the Director shall not either directly or indirectly solicit, induce, recruit or encourage
any of the Company’s employees to leave their employment, or take away such employees, or attempt
to solicit, induce, recruit, encourage or take away employees of the Company, either for the
Director or for any other person or entity.

     4. Confidential Information. The Director acknowledges that during the course of his
engagement with the Company that he will produce and have access to information relating to
personnel, sales, forecasts, customers and financial, operational and scientific matters of the

	 	 	 
	1

	 	Director Agreement
	 

	 	Oculus Innovative Sciences, Inc.

 

 

Company, whether developed by the Director or by others (collectively, “Confidential
Information”). The Director understands that any and all Confidential Information is received or
developed by him and is disclosed to him in confidence, and is to be used only for the purposes for
which it is provided. During the term of his engagement with the Company or thereafter, the
Director shall not directly or indirectly, except as required by the normal business of the Company
or expressly consented to in writing by the Board of Directors of the Company: (i) disclose,
publish or make available any Confidential Information, other than to an employee, officer or
director of the Company who, in the reasonable exercise of the Director’s judgment, needs to know
such Confidential Information in order to perform his duties to the Company; (ii) sell, transfer or
otherwise use or exploit or permit the sale, transfer, use or exploitation of the Confidential
Information for any purposes other than those for which they were provided; or (iii) remove from
the Company’s premises or retain upon termination of his engagement any Confidential Information,
any copies thereof or any tangible or retrievable materials containing or constituting Confidential
Information. The Director further agrees that all files, letters, memos, reports, sketches,
drawings, customer lists, telephone lists or other written material containing Confidential
Information which shall come into his possession shall be the exclusive property of the Company to
be used only in the performance of Company duties. All such written materials shall be delivered
to the Company upon termination of the Director’s engagement with the Company.

     The restrictions on the use or disclosure of Confidential Information shall not apply to any
information that the Director can document is or was: (i) independently developed by the Director
prior to the time of disclosure; (ii) in the public domain without breach of this Agreement and
through no fault of the Director; (iii) at the time of disclosure to the Director properly known to
such party free of restriction or lawfully received free of restriction from another source having
the right to so furnish such information; or (iv) which the Company agrees in writing is free of
such restrictions.

     5. Equitable Remedies. The Director agrees that it would be impossible or inadequate
to measure and calculate the Company’s damages from any breach or threatened breach of the
covenants set forth in sections 2, 3, and 4 of this Agreement. Accordingly, the Director agrees
that in the event of any alleged breach or threatened breach of those sections, the Company will
have available, in addition to any other right or remedy available, the right to obtain an
injunction from a court of competent jurisdiction restraining such alleged breach or threatened
breach.

     6. Company Stock Options. As partial compensation for Director’s services to the
Company, the Director shall be granted an option to purchase [___] shares of Common Stock of
the Company at an exercise price per share of $[___] (the “Stock Options”). Twenty percent (20%) of
the Stock Options shall vest on each of the first five (5) annual anniversary dates of the grant date for each date on which Director is a director of the Company. The Stock Options must be
exercised within five (5) years after the date on which the last vesting of the Stock Options
occur; provided, however, that if the Director is requested to resign for cause (as defined below)
or is removed for cause (as defined below), the Stock Options must be exercised, in whole or in
part, within thirty (30) days of such resignation or removal.

	 	 	 
	2

	 	Director Agreement
	 

	 	Oculus Innovative Sciences, Inc.

 

 

     Notwithstanding the foregoing, upon their grant, the Stock Options shall become immediately
vested upon either of the following events:

          (a) The Company becomes a public reporting company under the Securities Exchange Act of 1934
as a result of an initial public offering, merger or acquisition; and/or

          (b) The Director is not reelected or is requested to resign without cause or removed without
cause (as defined below) following a change in control (as defined below).

     For purposes of this Agreement, “cause” means: (i) malfeasance in office; (ii) gross
misconduct or neglect; (iii) gross incompetence or inefficiency; (iv) acts of moral turpitude; or
(v) repeated failure to participate (either by telephone or in person) board meetings on a regular
basis despite having received proper notice of the meetings at least 48 hours in advance thereof.

     For purposes of this Agreement, “change in control” is defined as follows:

          (i) When any “person”, as such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (other than the Company, a subsidiary of the Company or a Company
employee benefit plan, including any trustee of such plan acting as a trustee) is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under that Act), directly or indirectly, of securities
of the Company representing fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding securities; or

          (ii) The occurrence of a transaction requiring shareholder approval and involving either the
sale of all or substantially all of the assets of the Company or the merger of the Company with or
into another entity.

     The Stock Options and the underlying shares shall be subject to certain restrictions and
legends as shall be specified in any documents authorizing such Stock Options and shares. The
Stock Options and the underlying shares shall not be issued unless the issuance and delivery of
such Stock Options and shares shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the requirements of any stock
exchange or quotation system upon which the underlying shares may then be listed or quoted, and
shall be further subject to the approval of counsel for the Company with respect to such
compliance. Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful
issuance of any underlying shares hereunder, shall relieve the Company of any liability in respect
of the non-issuance of such Stock Options and shares as to which such requisite authority shall not
have been obtained.

     7. Expenses. The Director shall be entitled to reimbursement of his reasonable
expenses incurred on behalf of the Company and reimbursement to the Director shall be due and made
against an itemized list of such expenses. Any expenses in excess of $100 shall require the prior
approval of the Company.

	 	 	 
	3

	 	Director Agreement
	 

	 	Oculus Innovative Sciences, Inc.

 

 

     8. Indemnification. The Company will indemnify and defend the Director
against any liability incurred in the performance of his services to the Company to the
fullest extent authorized in Company’s Articles of Incorporation, bylaws, and applicable
law. The Company has purchased Director’s and Officer’s liability insurance, and
Director shall be entitled to the protection of any insurance policies the Company
maintains for the benefit of its directors and officers against all costs, charges and
expenses in connection with any action, suit or proceeding to which he may be made a
party by reason of his affiliation with the Company, its subsidiaries, or affiliates.

     9 Assignment by Director. This Agreement is personal, and the Director’s rights and
obligations under this Agreement are not and shall not be transferable by assignment or otherwise.
Any attempted assignment in violation of this section 9 shall be voidable at the Company’s option
and shall entitle the Company to terminate the Agreement.

     10. Assignment by the Company. Nothing in this Agreement shall prevent the
consolidation of the Company with, or its merger into, any other corporation or the assignment by
the Company of this Agreement and the performance of its obligations hereunder to any affiliated
company. If the Company shall merge into, sell, assign or transfer its operations to any
successor, the Company shall have the right to assign all of its right, title and interest in this
Agreement to such successor; provided, however, that such successor assumes and agrees to perform,
from and after the date of such assignment, all of the terms, conditions and provisions imposed by
this Agreement upon the Company. In the event of such an assignment by the Company and of such
assumption and agreement by a successor, all further rights, as well as all further obligations, of
the Company under this Agreement shall cease and terminate, and thereafter, the term “the Company”
wherever used herein shall be deemed to refer to such successor or assignee. This Agreement shall
inure to the benefit of, and be enforceable by, any corporate successor to or assignee of the
Company.

     11. Notice. Any notice to be given to the Company under the terms of this Agreement
shall be addressed to the Company at the address of its principal place of business, and any notice
to be given to the Director shall be addressed to him at his home address last shown on the records
of the Company, or at such other address as either party may hereafter designate in writing to the
other. Any such notice shall be deemed to have been duly given when enclosed in a properly sealed
and addressed envelope, registered or certified, and deposited (postage and registry or
certification fee prepaid) in a post office or branch post office regularly maintained by the
United States government.

     12. Construction. The provisions of this Agreement are divisible and, so far as they
are covenants not to compete, shall be operative to the extent, both as to time and area covered,
that they may be made so applicable; if any provisions, or any part hereof, are declared invalid or
unenforceable, the validity and enforceability of the remainder of such provisions, or parts
hereof, and the applicability hereof shall not be affected thereby.

     13. Waiver. Waiver of any term or condition contained in this Agreement by any party
to this Agreement shall not be construed as a waiver of a subsequent breach or failure of the same
term or condition or a waiver of any other term or condition contained in this Agreement.

	 	 	 
	4

	 	Director Agreement
	 

	 	Oculus Innovative Sciences, Inc.

 

 

     14. Applicable Law. The provisions of this Agreement shall be interpreted under, and
performance of the parties hereto shall be governed by, the laws of the State of California.

     15. Amendments. The provisions of this Agreement may be waived, amended, modified, or
repealed, in whole or in part, only on the written consent of all parties to this Agreement.

     16. Survival. The respective obligations and covenants of the parties under this
Agreement which shall by their nature extend beyond the expiration or termination of this
Agreement, including, without limitation, the confidentiality and non-solicitation obligations of
the Director and the indemnification obligations of the Company, shall survive the termination or
expiration of this Agreement.

     17. Headings. The headings throughout this Agreement are for the convenience and
reference purposes only and shall not be deemed to expand, modify, amplify, or aid in the
interpretation, construction, or meaning of any provision of this Agreement.

     18. Entire Agreement. The terms of this Agreement are intended by the parties as a
final expression of their agreement with respect to such terms as are included in this Agreement,
and such terms may not be contradicted by evidence of any prior or contemporaneous agreement. The
parties further intend that this Agreement constitutes the complete and exclusive statement of its
terms and that no extrinsic evidence whatsoever may be introduced in any judicial proceedings, if
any, involving this Agreement.

     IN WITNESS WHEREOF, the parties hereto have executed or caused this Agreement to be executed
as of the Effective Date.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	The Director:	 	 	 	The Company:
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Oculus Innovative Sciences, Inc.,
	 	 	 	 	 	 	a California corporation
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	 	 	 
	 

	 	 	 	 	 	Its:
	 	 

	 	 
	 

	 	 	 	 	 	 	 	 

	 	 

	 	 	 
	5

	 	Director Agreement
	 

	 	Oculus Innovative Sciences, Inc.

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