REVENUE SHARING DISTRIBUTION AGREEMENT

Exhibit 10.3

REVENUE SHARING DISTRIBUTION AGREEMENT

This Agreement is made and entered into as of the latest date set forth on the signature lines below (the “Effective Date”) by and between Oculus Innovative Sciences, Inc., a Delaware corporation having a place of business at 1129 No. McDowell Boulevard, Petaluma, California, USA 94954 (“Company”), and VetCure, Inc., a California corporation having a place of business at 3546 N. Riverside Ave, Rialto, CA 92377 (“Distributor”).

     WHEREAS Company has developed proprietary technology and know-how known as the Vetericyn Wound Care Spray (“Vetericyn”) which the Company distributes and sells in the form of liquid solutions, as further identified in Exhibit A to this Agreement, and

     WHEREAS Distributor desires to distribute Vetericyn in the Territory (as hereinafter defined).

     NOW THEREFORE in consideration of the mutual promises and undertakings of the parties hereto the parties agree as follows:

     1.  Definitions .

          1.1 “Change in Control” shall mean (a) any consolidation or merger of either party with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of such party immediately prior to such consolidation, merger or reorganization, own less than fifty percent (50%) of such party’s voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions to which either is a party in which in excess of fifty percent (50%) of such party’s voting power is transferred; or (b) a sale, lease or other disposition of all or substantially all the assets of either party.

          1.2 “Confidential Information” means information of a party, which information is conspicuously marked with “Confidential”, “Proprietary” or other similar legend. If Confidential Information is orally disclosed or it is observed, it shall be identified as such at the time of disclosure or observation and a brief written description and confirmation of the confidential nature of the information shall be sent to the recipient within thirty (30) days after the disclosure. The Solution Specifications, quantities, schedules and pricing, projections and business plans shall be considered Confidential Information hereunder whether disclosed orally or in writing, or whether or not marked “Confidential” or “Proprietary.”

          1.3 “Intellectual Property Rights” means all intellectual property rights worldwide arising under statutory or common law or by contract and whether or not perfected, now existing or hereafter filed, issued, or acquired, including all (a) patent rights; (b) rights associated with works of authorship including copyrights and mask work rights; (c) trademarks, service marks, trade dress and trade names; (d) rights relating to the protection of trade secrets and confidential information; and (e) any right analogous to those set forth herein and any other proprietary rights relating to intangible property.

          1.4 “Markets” means the animal health markets solely for use in the treatment of all types of animals (non-humans) within the Territory.

          1.5 “Purchase Order” shall mean an offer from Distributor received by Company, whether in written or other form, or in electronic form, to purchase or schedule delivery of a specified amount of Solutions that complies with the requirements set forth in this Agreement.

          1.6 “Regulatory Approvals” means any and all approvals, applications, registrations, licenses, certifications and other requirements imposed by any governmental agency or other entity exercising any regulatory or other governmental or quasi-governmental authority.

          1.7 “Company’s Technology” means Company’s proprietary technology and know-how known as the Microcyn Technology, used for (among other things) veterinary applications.

          1.8 “Solution(s)” means the liquid solutions based on Company’s Microcyn Technology which are to be provided by Company under this Agreement as Vetericyn Wound Care Spray, as further described in Exhibit A . From time to time, the Company may introduce new products and packaging, including, but not limited to, otic cleanser, gels, shampoos, etc., based on the Microcyn Technology platform and new packaging configurations. Distributor will be granted exclusive distribution rights for these new products in the Market during the Term and within the Territory. The parties intend to work in good faith to finalize pricing, packaging and labeling regarding these new products in the future.

          1.9 “Solution Specifications” means the specifications for the Solutions as set forth in Exhibit B .

          1.10 “Territory” shall mean the United States of America.

     2.  Purchases and Solutions .

          2.1 General . This Agreement establishes the terms and conditions on which Company will sell to Distributor the Solutions. This Agreement shall not be modified, supplemented or interpreted by any trade usage or prior course of dealing not made a part of this Agreement by its express terms.

          2.2 Appointment . Subject to all the terms and conditions of this Agreement, Company hereby appoints Distributor for the term of this Agreement as the exclusive distributor of the Solutions only within the Market and only within the Territory. Distributor may distribute Solutions only to persons and entities located and taking delivery within the Territory . Furthermore, Solution distributed by Distributor for further distribution may be distributed only through subdistributors who are bound in writing for Company’s benefit to all the restrictions on Distributor contained in this Agreement. Nothing in this Agreement shall be construed as limiting in any manner Company’s marketing or distribution activities or its appointment of other dealers, distributors, licensees or agents outside the Market and/or outside the Territory.

          2.3 Shipment Terms and Costs . Solution is delivered DDP, Delivered Duty Paid, from the Company’s manufacturing plant in Zapopan, Mexico to Distributor’s warehouse in Rialto, California.

          2.4 Purchase Order and Forecast . On a quarterly basis, Distributor shall provide a non-binding, rolling forecast of purchases of Solutions for the next six (6) months after the period covered by the Purchase Order.

          2.5 Purchase Orders . All Purchase Orders shall contain such pricing, requested shipment schedule, delivery address, requested carrier and quantity terms as set forth in Exhibit A .

     When acknowledgement of receipt and acceptance of the Purchase Order is made by Company (either by written notice or by shipment of the Solutions covered by the Purchase Order), the Purchase Order shall be deemed a commitment to purchase and sell the Solutions pursuant to the terms of this Agreement.

          2.6 Pricing . The Solution prices are set forth in Exhibit A and shall be payable in US Dollars.

          2.7 Payment Terms . Payment terms are thirty (30) days net for OBP (defined below). All payments related to the Revenue Sharing (also defined below) portion are due thirty (30) days after month end for which the Revenue Sharing calculation applies.

          2.8 Minimum Purchase . Minimum ordering quantities are set forth in Exhibit A . No orders shall be accepted, unless such orders are at least equal to or greater than the minimum quantities set forth in Exhibit A .

     3.  Delivery and Acceptance .

          3.1 Delivery of Solution . Delivery of Solution shall be DDP, Delivered Duty Paid, from the Company’s manufacturing plant in Zapopan, Mexico to Distributor’s warehouse in Rialto, California. Shipment dates are approximate and are subject to change.

          3.2 Packaging . Company shall package the Solutions for shipment to Distributor in the manner customarily used by Company, unless Distributor requires different packaging specifications, in which case any such different packaging shall be at Distributor’s expense. Distributor will provide such reasonable specifications to Company in writing within thirty (30) days of the Effective Date. After execution of this Agreement, Distributor will, at its own expense, begin studying all necessary steps to conduct final finished bottlling and labeling (“Packaging”) of Vetericyn in Distributor’s facility. The Company will, at its own expense, begin studying all necessary steps to manufacture the Solution in Petaluma, California and ship to Distributor in bulk. Distributor intends to target certain Packaging and Solution pricing not to exceed $2.00 per bottle. If the costs of Packaging and Solution pricing are greater than $2.00 per bottle, which includes transportation and duties, if any, then Distributor will absorb any additional costs over $2.00 per bottle. If the costs of Packaging and Solution are less than $2.00 per bottle, then any savings will be shared equally between the parties. Upon achieving all necessary regulatory approvals necessary for Packaging medical devices, Distributor will have the right to Package the Solution for the Market in the Territory. The Company will conduct periodic audits, with reasonable prior notice, of Distributor’s Packaging facility in an effort to ensure Distributor complies with appropriate regulatory requirements for final finished Packaging. The parties agree to work in good faith to create a similar Revenue Sharing mechanism, as described in Exhibit A , upon transfer of Packaging to Distributor.

          3.3 Future Manufacturing Rights . Upon achieving a certificate of compliance under Good Manufacturing Practices (“GMP”) to Package medical devices under US Food and Drug Administration rules, the parties agree to work in good faith to study Distributor’s manufacturing capabilities under the following scenario. Distributor would provide a secure manufacturing area within Distributor’s facility solely to house the Company’s proprietary manufacturing line. Distributor would further reimburse all salary and related employment costs for a Company employee, if deemed necessary by the parties, to maintain and operate the Company’s manufacturing line within Distributor’s facility. Any potential costs savings that result from the transfer of manufacturing to Distributor’s facility would be split evenly between the Company and Distributor. For purposes of clarity, any transfer of manufacturing rights will only occur upon written mutual agreement, or pursuant to Section 10.3.

          3.4 Risk of Loss or Damage . Title and risk of loss will be transferred to Distributor upon delivery of Solutions by Company. Distributor will also bear the risk of loss with respect to any Solutions rejected by Distributor until received by Company in Petaluma, California, or another location by mutual agreement.

          3.5 Delivery Performance . Company may make partial deliveries of the Solutions under this Agreement. Partial deliveries will be separately invoiced by Company and paid for by Distributor without regard to subsequent deliveries.

          3.6 Cancellation; Rescheduling. Distributor may not cancel or reschedule any shipment under a Purchase Order once the Purchase Order is accepted by Company.

          3.7 Solution Acceptance . All Solutions will be subject to final inspection and acceptance by Distributor within seven (7) working days after receipt. Distributor may only reject Solutions if the Solutions shipped by Company did not materially conform to the Solution Specifications at the time of shipment by Company. In any event, use of the Solutions by Distributor or its customers, or the failure by Distributor to return the Solutions within fourteen (14) working days following delivery of such Solutions shall constitute acceptance by the Distributor. Any Solutions properly rejected will be returned to Company in accordance with the return procedures set forth in Article VI with respect to warranty claims.

          3.8 Force Majeure . Neither party shall be liable for nonperformance or delay in performance (other than of obligations regarding payment of money or confidentiality) caused by any event reasonably beyond the control of such party including, but not limited to wars, hostilities, revolutions, riots, civil commotion, national emergency, strikes, lockouts, epidemics, fire, flood, earthquake, force of nature, explosion, embargo, or any other Act of God, or any law, proclamation, regulation, ordinance, or other act or order of any court, government or governmental agency.

     4.  Certain Obligations .

          4.1 Distribution Efforts . Distributor shall use commercially reasonable efforts to successfully market the Solutions in the Market in the Territory on a continuing basis and to comply with good business practices and all laws and regulations relevant to t