CONFIDENTIAL TREATMENT REQUESTED BY NOVABAY PHARMACEUTICALS, INC.

THIS AMENDMENT N°2 (the “Amendment 2”) is entered into as of this 2nd day of December, 2010 (the “Amendment 2 Effective Date”), by and between NovaBay Pharmaceuticals, Inc., a Delaware corporation, having its principal place of business at 5980 Horton Street, Suite 550, Emeryville, California 94608 (“NovaBay”), and Galderma S.A. a Swiss corporation, having its principal place of business at World Trade Center – 2 avenue Gratte-Paille – CP 552 CH-1000 Lausanne, Switzerland (“Galderma”),

 

WHEREAS, Galderma and NovaBay Pharmaceuticals, Inc., a California Corporation (“NovaBay California”) have entered into a COLLABORATION AND LICENSE AGREEMENT, effective as of March 20, 2009, as subsequently amended on December 1, 2009 (collectively, the “Agreement”) under which they have agreed to collaborate to develop and obtain regulatory approval for, and commercialize, pharmaceutical products incorporating Collaboration Compounds in the Field;

 

WHEREAS, on June 29, 2010, NovaBay California merged into NovaBay Pharmaceuticals, Inc., a Delaware Corporation and the former assigned all rights and responsibilities to the latter pursuant to an Agreement and Plan of Merger dated June 25, 2010—the certificate of merger attached hereto as Schedule A; and

 

WHEREAS, the Parties now wish to further amend the Agreement, all as set forth in this Amendment 2 herein below.

 

NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party, the Parties agree as follows:

 

(a)           Replaced Definitions.  The following definitions in Sections 1.15, 1.24, 1.32, 1.55 and 1.62 shall replace in their entirety the corresponding sections in the Agreement:

1.15 “Continuation Period” shall mean the period beginning on October 1, 2010 and continuing through the remainder of the Agreement Term.

 

1.24 “Field” shall mean shall mean the prevention or treatment of any and all dermatological diseases and disorders in humans (i.e., diseases or disorders of the skin or nails including onychomycosis) but excluding diseases and disorders of the hair and any and all Rare Diseases, but shall exclude all Excluded Indications.  For clarity, the Field excludes the Excluded Field.

 

1.32 “Galderma Territory” shall mean (i) with respect to Impetigo Products, all jurisdictions in the world including Asia-Pacific other than the NovaBay Impetigo Territory and (ii) with respect to all Collaboration Products other than the Impetigo Products, all jurisdictions in the world other than the NovaBay Other Territory.

 

1.55 “NovaBay Territory” shall mean (i) with respect to Impetigo Products, the countries listed on Exhibit 1.55A hereto (the “NovaBay Impetigo Territory”) and (ii) with respect to all Collaboration Products other than the Impetigo Products, the countries listed on Exhibit 1.55B (the “NovaBay Other Territory”).

 

1.62 “Primary Indications” shall mean, collectively and individually, (i) onychomycosis and (ii) impetigo.

 

(b)           New Definitions.  The following definitions are hereby added to Article 1 of the Agreement:

“Asia-Pacific” shall mean the countries listed on Schedule A to this Amendment 2.

 

“Dermatology Field” shall mean (i) any and all applications in the Field, (ii) the prevention and treatment of diseases and disorders of the hair (including Rare Diseases thereof) and (iii) any Rare Disease comprising the prevention or treatment of diseases and disorders of the skin or nails.

 

“Onychomycosis Product” shall mean an Anti-Fungal Product that is labeled for (or Developed for) the treatment or prevention of onychomycosis in humans.

 

“Rare Disease” shall mean any disease or condition that meets the criteria for an orphan or rare disease or condition in a Major Market, including, for example in the United States, in §526(a)(2)(1) of the Federal Drug and Cosmetic Act (U.S. Orphan Drug Act (1983)); in Europe, in the Orphan Drug Regulation 141/2000; and in Japan, in the Orphan Drug Amendment (1993).

 

(a)           During the Continuation Period.  Further in connection with the continuation, Galderma acknowledges its obligation to fund, effective as of 1 October 2010, NovaBay FTEs with respect to the research and non-clinical development of Collaboration Products in the Field in accordance with the provisions of Section 8.3.1 of the Agreement.  Accordingly, within eight (8) business days of receipt of invoice therefor, Galderma shall fund such activities for the period of 1 October — 31 December 2010 and thereafter fund such activities monthly in advance in accordance with Section 8.3.1(a).  In addition to the activities funded under the provisions of Section 8.3.1 of the Agreement, Galderma agrees to pay NovaBay $[***] within eight (8) business days of the Amendment 2 Effective Date, in consideration of other research and non-clinical developments of Collaboration Products for the period running from 1 October 2010, until 31 March 2011.  The increase of the FTE rate as described in Section 8.3.1 of the Agreement will be effective beginning with the calendar year 2011.

(b)           Activities Prior to Continuation.  The Parties acknowledge that NovaBay, at the request and for the benefit of Galderma, has performed at NovaBay’s own expense certain research and non-clinical development of Collaboration Products in the Field prior to 1 October 2010.  As partial reimbursement for such research and development activities, Galderma agrees to pay NovaBay $[***] within eight (8) business days of the Amendment 2 Effective Date.

(c)           Development Activities.  The Parties acknowledge that as set forth in Section 3.1 of the Agreement, Galderma shall have primary responsibility for the Development of Collaboration Products in the Field for the Galderma Territory.  Without limiting the foregoing, Galderma agrees that if it intends to utilize a Third Party to perform any such Development activities in accordance with Section 3.8 of the Agreement including for any Impetigo Product or any Onychomycosis Product, Galderma shall first discuss in good faith with NovaBay the possibility of NovaBay performing such activities, taking into consideration NovaBay’s capabilities and the requirements of the particular project(s).  If the Parties so agree that NovaBay will perform any such activities, then the Parties shall establish a plan and budget pursuant to which NovaBay shall perform such activities.  If after a period of thirty (30) days following initiation of the discussions, the Parties fail to reach an agreement, then Galderma shall be free to subcontract to any Third Party.

(a)           Expansion Fee.  $[***] within eight (8) business days of receipt of an invoice therefor, if Galderma decides to initiate a first POC study for an Onchomycosis Product.  This decision will be taken no later than January 31st 2011 ; in the event that Galderma fails to notify NovaBay of such decision on or before, January 31st 2011, then notwithstanding anything to the contrary the Field shall exclude onychomycosis for all purposes of the Agreement and accordingly Galderma shall have no rights with respect thereto.

 

(b)           Milestones for Onychomycosis Products.  Subject to Section 8.4.1 and Section 8.4.2 of the Agreement, Galderma shall pay to NovaBay the amounts set forth in the following table (each, an “Onychomycosis Milestone Payment”) upon the first achievement of the corresponding milestone event for the first Onychomycosis Product (each, a “Milestone Event”):

 

(c)           Royalties.  The royalty for the Onychomycosis Products are subject to the provisions of Section 8.5 of the Agreement.  For the avoidance of doubt the rate for the Onychomycosis Products is the same as in Section 8.5.1 of the Agreement.

(a)           Expansion Fee.  $[***] within eight (8) business days of receipt of an invoice therefor; if Galderma decides to include Asia — Pacific Territory in the Galderma Territory.  This decision will not be later than January 31st, 2011; in the event that Galderma fails to notify NovaBay of such decision on or before, January 31st, 2011, then notwithstanding anything to the contrary the Galderma Territory for the Impetigo Products shall exclude Asia-Pacific for all purposes of the Agreement and accordingly Galderma shall not have the right to Develop or Commercialize Impetigo Product therein.

 

(b)           Milestone for Inclusion of Asia-Pacific.  $[***] within thirty (30) of the first receipt of Marketing Approval in a country in the Asia-Pacific territory.

IN WITNESS WHEREOF, the Parties have caused this AMENDMENT N°2 TO THE COLLABORATION AND LICENSE AGREEMENT to be duly executed, effective as of the Effective Date, by their respective duly authorized officers.