COLLABORATION AND LICENSE AGREEMENT

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CONFIDENTIAL TREATMENT REQUESTED BY NOVABAY PHARMACEUTICALS, INC.

CONFIDENTIAL

COLLABORATION AND LICENSE AGREEMENT

by and between

NOVABAY PHARMACEUTICALS, INC.

and

GALDERMA S.A.

dated as of March 20, 2009

***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission.

CONFIDENTIAL

TABLE OF CONTENTS

Article I DEFINITIONS		1
Article II GOVERNANCE; COORDINATION		18
2.1 Coordination Committee		18
	2.1.1 Establishment	18
	2.1.2 Responsibilities	18
	2.1.3 Membership	18
	2.1.4 Meetings	19
	2.1.5 Decision Making	19
2.2 Day-to-Day Responsibilities		19
	2.2.1 General	19
	2.2.2 Project Teams	20
	2.3 Information Sharing	20
	2.4 Coordination	20
	2.4.1 General	20
	2.4.2 Minimization of Substitutability	21
	2.4.3 Japan	21
Article III DEVELOPMENT PROGRAM		21
3.1 General		21
3.2 During the Initial Period		22
	3.2.1 Acne	22
	3.2.2 Impetigo	22

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TABLE OF CONTENTS

(Continued)

3.3 During the Continuation Period		22
3.4 Diligence		22
3.5 Development Proposals		22
	3.5.1 General	22
	3.5.2 First Negotiation	23
	3.5.3 PPOC Notice	23
	3.5.4 Preset Terms	23
	3.5.5 Inability to Agree on Terms	24
	3.5.6 Failure to Respond	24
	3.5.7 Excluded Indications	25
	3.5.8 Conflicts	25
	3.5.9 Expenses	25
3.6 Development Plans		26
	3.6.1 Establishment	26
	3.6.2 Contents	26
3.7 Disclosure of Formulation Technology		26
3.8 Subcontractors		27
Article IV COMMERCIALIZATION OF COLLABORATION PRODUCTS		27
4.1 Commercialization		27
4.2 Commercialization Plan		27
4.3 Galderma Marketing Partners		28
	4.3.1 General	28
	4.3.2 Conditions	28

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TABLE OF CONTENTS

(Continued)

4.4 NovaBay’s Right to Co-promote to Healthcare Institutions in North America	28
4.4.2 Exercise	29
4.5 Cooperation and Consultation	30
4.6 Galderma First Right of Negotiation	30
Article V DEVELOPMENT AND COMMERCIALIZATION IN JAPAN	31
5.1 Development in Japan	31
5.1.1 Japan Election Notice	31
5.1.2 Pre-Pivotal Development	31
5.1.3 Pre-Pivotal Japan Report	31
5.1.4 Pivotal Trials	32
5.2 Commercialization in Japan	32
5.2.1 Both Parties Fund	32
5.2.2 One Party Funds	33
5.2.3 Royalties to Galderma on Japan Sales	34
Article VI MANUFACTURING AND SUPPLY, REGULATORY &OTHER MATTERS	34
6.1 Manufacturing and Supply	34
6.1.1 Collaboration Compounds	34
6.1.2 Collaboration Products	35
6.1.3 Supply by Galderma	35
6.1.4 Transfer Price	35
6.1.5 Supply Agreement	35
6.1.6 Coordination	36
6.2 Regulatory Matters	36
6.2.1 Filings	36
6.2.2 Clinical Safety Reporting; Pharmacovigilance	36
6.2.3 Cooperation	37
6.2.4 Regulatory Inspection/Audit Rights	37
6.3 Transfer of Data and Regulatory Filings	38
6.4 [***]	39
6.4.1 [***]	39
6.4.2 [***]	39
6.4.3 [***]	39
Article VII LICENSES	39
7.1 License Grants	39
7.1.1 To Galderma	39
7.1.2 To NovaBay	40
7.1.3 No Other Active Ingredients	40

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(Continued)

7.2 No Other Rights		40
7.3 Use of NovaBay Technology		40
7.4 Use of Galderma Technology		41
7.5 Conflicts of Interest		41
7.6 Medical Devices		41
	7.6.1 Exclusivity	41
	7.6.2 Discussions	41
Article VIII PAYMENTS		41
8.1 Certain Fees		41
	8.1.1 Upfront Fee	41
	8.1.2 Monthly Fee	42
	8.1.3 Completion of Formulation Feasibility Studies	42
8.2 Continuation		42
	8.2.1 Continuation Fee	42
	8.2.2 Certain Reimbursements	42
8.3 Galderma Funding During the Continuation Period		42
	8.3.1 FTE Funding	42
	8.3.2 Non-FTE Costs	43
8.4 Development Milestone Payments		43
	8.4.1 Certain Terms	44
	8.4.2 Milestone Payment Timing	45
8.5 Royalty Payments to NovaBay		45
	8.5.1 Acne Products	45
	8.5.2 Anti-Bacterial Products	45
	8.5.3 Anti-Fungal Products	45
	8.5.4 Anti-Viral Products	45
	8.5.5 Other Products	46
	8.5.6 Certain Terms	46
	8.5.7 Sales Supported by NovaBay	46
	8.5.8 Certain Royalty Conditions	47
	8.5.9 Term of NovaBay Royalties	47

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(Continued)

8.6 Royalty Payments to Galderma		48
	8.6.1 For Collaboration Products in Japan	48
	8.6.2 Royalty-Bearing NovaBay Products	48
8.7 Material Adverse Events		49
8.8 Royalty Reports		49
8.9 Payment Method		49
8.10 Taxes		50
8.11 Records		50
8.12 Inspection of Records		50
8.13 Late Payment		51
8.14 Currency Conversion		51
Article IX INTELLECTUAL PROPERTY		51
9.1 Ownership of Inventions		51
	9.1.1 General	51
	9.1.2 Compound Improvements	52
	9.1.3 Agreements with Affiliates and Third Parties	52
9.2 Patent Prosecution		52
	9.2.1 General	52
	9.2.2 Projected Patent Filings	52
	9.2.3 NovaBay Patents	52
	9.2.4 Galderma Patents	53
	9.2.5 Joint Patents	53
9.3 Defense of Third Party Infringement Claims		53
9.4 Enforcement		54
	9.4.1 Initiating Enforcement Actions	54
	9.4.2 Recoveries	54
9.5 Third Party Technologies		55
	9.5.1 By NovaBay after the Effective Date	55
	9.5.2 By Galderma after the Effective Date	55
	9.5.3 Other Conditions	56

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TABLE OF CONTENTS

(Continued)

9.6 Patent Marking		56
9.7 Trademarks		56
	9.7.1 Galderma Product Marks	57
	9.7.2 NovaBay Product Marks	57
	9.7.3 NovaBay Logo	57
	9.7.4 Co-Promotion	58
	9.7.5 World-wide Branding Strategies	58
Article X CONFIDENTIALITY		58
10.1 Confidentiality; Exceptions		58
10.2 Authorized Use and Disclosure		59
10.3 Publications		59
10.4 Publicity		60
	10.4.1 Confidential Terms	60
	10.4.2 Publicity Review	60
10.5 Prior Agreements		61
Article XI REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION		61
11.1 General Representations and Warranties		61
11.2 NovaBay’s Warranties		61
11.3 Covenant		63
11.4 Disclaimer of Warranties		63
11.5 Indemnification		63
	11.5.1 Indemnification by NovaBay	63
	11.5.2 Indemnification by Galderma	64
	11.5.3 Procedure	64
11.6 Insurance		64
Article XII TERM AND TERMINATION		65
12.1 Term		65
12.2 Termination by Galderma		65
	12.2.1 Failure of Formulation Feasibility	65
	12.2.2 Prior to Continuation Period	65
	12.2.3 During the Continuation Period	65
	12.2.4 For Safety Reasons	65
	12.2.5 Competitive Change of Control	66
12.3 Termination for Breach		66
	12.3.1 General	66
	12.3.2 Termination of the Licenses in 7.1.2(c)	66

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(Continued)

12.4 Termination for Failure to Pay the Continuation Fee		66
12.5 General Effects of Expiration or Termination		66
	12.5.1 Accrued Obligations	66
	12.5.2 Non-Exclusive Remedy	66
	12.5.3 No Milestone Payment	66
	12.5.4 Return of Materials	67
	12.5.5 General Survival	67
12.6 Effects of Certain Terminations		67
	12.6.1 Transition Assistance	67
	12.6.2 Ongoing Trials	68
	12.6.3 Commercialization	68
	12.6.4 Regulatory Filings/Data	69
	12.6.5 Technology Licenses	69
	12.6.6 Trademarks	70
	12.6.7 Marketing Partners	70
	12.6.8 Governance	71
	12.6.9 Suspension of Activities	71
12.7 Termination With Respect to Collaboration Products		71
12.8 Termination for Competitive Change of Control		71
	12.8.1 Termination of Certain Provisions	71
	12.8.2 Section 8.5.8	71
	12.8.3 Field	71
	12.8.4 In-Process Collaboration Products	71
	12.8.5 Data	72
	12.9 Termination Pursuant to Section 12.3.2	72
	12.10 Termination Press Releases	72

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TABLE OF CONTENTS

(Continued)

Article XIII DISPUTE RESOLUTION		73
13.1 Dispute Resolution		73
13.2 Pre-Arbitration Dispute Resolution		73
13.3 Arbitration		73
	13.3.1 Arbitrator	73
	13.3.2 Substantive Law	73
	13.3.3 Enforcement/Service	74
	13.3.4 Confidentiality of Proceedings	74
	13.3.5 Costs	74
13.4 Provisional Remedies		74
Article XIV MISCELLANEOUS		74
14.1 Governing Law		74
14.2 Assignment		74
14.3 Notices		75
14.4 Waiver		76
14.5 Severability		76
14.6 Entire Agreement/Modification		76
14.7 Relationship of the Parties		77
14.8 Force Majeure		77
14.9 Compliance with Laws		77
14.10 Counterparts		77

***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been filed separately with the Commission

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COLLABORATION AND LICENSE AGREEMENT

This COLLABORATION AND LICENSE AGREEMENT (this “ Agreement ”) is entered into as of the 20th day of March, 2009 (the “ Effective Date ”) by and between NovaBay Pharmaceuticals, Inc., a California 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 Zugerstrasse 8, Cham CH-6330, Switzerland (“ Galderma ”). NovaBay and Galderma are each referred to herein by name or, individually, as a “ Party ” or, collectively, as “ Parties .”

BACKGROUND

A. NovaBay has developed certain proprietary technologies and compounds related to or comprising Aganocide Compounds (as defined below).

B. Galderma is a leader in the discovery, development, and commercialization of pharmaceutical products and medical devices for the prevention and treatment of skin diseases.

C. NovaBay and Galderma wish to collaborate to develop and obtain regulatory approval for, and commercialize, pharmaceutical products incorporating Collaboration Compounds (as defined below) in the Field (as defined below).

D. Galderma will be responsible for developing, marketing and selling such products in the Galderma Territory (as defined below) and NovaBay will have the right with respect thereto in the NovaBay Territory (as defined below), all on the terms and conditions set forth herein below.

NOW, THEREFORE, in consideration of the mutual covenants and agreements provided herein below and in consideration of the receipt and sufficiency of which is hereby acknowledged, NovaBay and Galderma hereby agree as follows:

ARTICLE I

DEFINITIONS

The following capitalized terms shall have the meanings given in this Article I when used in this Agreement:

1.1 “ Accounting Standards ” shall mean then-current applicable (i) generally accepted accounting principles in the United States (“ GAAP ”) as established by the Financial Accounting Standards Board or any successor entity thereto or other entity generally recognized as having the right to establish such principles, or (ii) International Financial Reporting Standards (“ IFRS ”) as established by the International Accounting Standards Board or any successor entity thereto or other entity generally recognized as having the right to establish such standards, in each case consistently applied by the applicable Person.

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1.2 “ Adverse Drug Reaction ” shall have the meaning as defined in the then-current guidelines and regulations promulgated by the ICH (International Conference on Harmonization of Technical Requirements for Registration of Pharmaceuticals for Human Use) and shall include any “Adverse Drug Experience” as defined in the then-current 21 CFR Section 314.80.

1.3 “ Acne Plan ” shall mean the then-current comprehensive plan (including timelines) for the following: (i) during the Initial Period, (A) appropriate study(ies) to determine the feasibility of one or more formulations for an Acne Product (the “ Formulation Feasibility Studies ”) and (B) the Development of such an Acne Product for the Galderma Territory through the completion of the first Phase II Clinical Trial with respect thereto (the “ Acne POC ”), and (ii) during the Continuation Period, further Development of Acne Products in the Field for the Galderma Territory through to Marketing Approval therefor.

1.4 “ Acne Product ” shall mean any Collaboration Product that is labeled for (or Developed for) the treatment or prevention of acne in humans.

1.5 “ Affiliate ” shall mean, with respect to the subject Person, another Person that controls, is controlled by or is under common control with such subject Person, for so long as such control exists. For purposes of this definition only, “control” shall mean beneficial ownership (direct or indirect) of more than fifty percent (50%) of the shares of a Person that is a corporation entitled to vote in the election of directors (or, in the case of a Person that is not a corporation, in the election of the corresponding managing authority). For the avoidance of doubt, neither L’Oréal S.A. nor Nestlé S.A., nor any of their respective Affiliates (other than Galderma and its subsidiaries), will be deemed an “Affiliate” of Galderma hereunder.

1.6 “ Aganocide Compound ” shall mean any chemical entity (i) having bactericidal, antibacterial, anti-infective, antimicrobial, antifungal, anti-parasitic, sporicidal, antiviral, immunomodulatory or anti-inflammatory activity, and [***].

1.7 “ Aganocide Product ” shall mean any pharmaceutical product incorporating an Aganocide Compound as an ingredient.

1.8 “ Capture Period ” shall mean the period of time starting upon the Effective Date and expiring three (3) years after the date on which Galderma ceases to fund at least five (5) NovaBay FTEs per year pursuant to Section 8.3.1.

1.9 “ Collaboration ” shall mean all activities performed by or on behalf of each Party with respect to the Field under this Agreement, including all activities of each Party under any Plan.

1.10 “ Collaboration Compound ” shall mean [***].

1.11 “ Collaboration Product ” shall mean each pharmaceutical product (i) incorporating a Collaboration Compound as one of its ingredients, and (ii) which requires approval by the FDA of a new drug application, as more fully defined in 21 C.F.R. §314.50 et. seq., in order to initiate marketing and sales of such pharmaceutical product in the United States or approval by the applicable Regulatory Authority of a similar application or submission in order to initiate marketing and sales of such pharmaceutical product in another Major Market, in each case whether sold as prescription only medication (POM), pharmacy only medication (P), over the counter or general sale license (GSL). For clarity, Collaboration Product shall include any formulation, delivery device, dispensing device or packaging required for effective use of such pharmaceutical product.

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1.12 “ Combination Product ” shall mean any Collaboration Product that incorporates at least one pharmaceutically active ingredient (each, an “ Other API ”) in addition to one or more Collaboration Compound(s), which Other API has independent biologic or chemical activity in the Field when present alone, and where the Collaboration Compound(s) and Other API(s) are sold as a single dosage form or in a single package or kit or where the labeling for the Collaboration Product requires use of such Collaboration Compound(s) with such Other API(s) and the Collaboration Compound(s) and Active Component(s) are sold at a combined price. For clarity, all references to “Collaboration Product” in this Agreement shall be deemed to include Combination Product.

1.13 “ Commercialization ” shall mean, with respect to a particular Collaboration Product in the Field, the conduct of any and all processes and activities to establish and maintain sales for such Collaboration Product (including with respect to reimbursement and patient access), including offering for sale, selling (including launch), marketing (including education and advertising activities), promoting, storing, transporting, distributing, and importing such Collaboration Product, in each case with respect to the Field. “ Commercialize ” and “ Commercializing ” shall have their correlative meanings.

1.14 “ Commercially Reasonable Efforts ” shall mean, with respect to a Person, use by or on behalf of such Person of sustained, continued and active efforts and the level of resources and urgency applied by such Person to a certain activity or activities that is consistent in each case with such Person’s practices for its other pharmaceutical products of a similar stage of product life, safety, efficacy and commercial potential. Without limiting the foregoing, Commercially Reasonable Efforts shall require the applicable Person to: (i) promptly assign responsibilities for activities for which it is responsible to specific employee(s) who are held accountable for the progress, monitoring and completion of such activities, (ii) set and consistently seek to achieve meaningful objectives for carrying out such activities, and (iii) make and implement decisions and allocate resources necessary or appropriate to advance progress with respect to and complete such activities.

1.15 “ Continuation Period ” shall mean the period beginning upon NovaBay’s receipt of the Continuation Fee and continuing thereafter through the Agreement Term.

1.16 “ Control ” shall mean, with respect to particular Know-How or a particular Patent, possession by the Party granting the applicable right, license or sublicense to the other Party as provided herein of the power and authority, whether arising by ownership, license, or other authorization, to disclose and deliver the particular Know-How to the other Party, and to grant and authorize under such Know-How or Patent the right, license or sublicense, as applicable, of the scope granted to such other Party in this Agreement without giving rise to a violation of the terms of any written agreement with any Third Party. “ Controlled ” and “ Controlling ” shall have their correlative meanings.

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1.17 “ Cover ” shall mean, with respect to any subject matter, the manufacture, use, sale, offer for sale, importation, exportation or other exploitation of such subject matter would infringe a Valid Claim at the time thereof. For clarity with respect to a Valid Claim of a patent application, “ Cover ” includes infringing such claim as if it were issued as then prosecuted. “ Covered ” and “ Covering ” shall have their correlative meanings.

1.18 “ Data ” shall mean any and all research and development data, including preclinical data, pharmacology data, chemistry data (including analytical, product characterization, manufacturing, and stability data), toxicology data, clinical data (including investigator reports (both preliminary and final), statistical analyses, expert opinions and reports, safety and other electronic databases) and all supporting data for each of the foregoing, in each case specifically directed to, or used in the Development of, a Collaboration Product and Controlled by a Party during the Agreement Term.

1.19 “ Development ” shall mean, with respect to any Collaboration Product in the Field, any and all processes and activities conducted to prepare and file for, obtain and maintain any Marketing Approval for such Collaboration Product, which may include scale-up, non-clinical and preclinical testing, ADME (absorption, distribution, metabolism and excretion) and toxicology studies, clinical trials (including trials for additional indications in the Field for a Collaboration Product for which a Marketing Approval has been obtained), quality of life assessments, pharmacoeconomics, mandatory post-marketing studies, label expansion studies, regulatory affairs (including CMC (chemistry, manufacturing and controls) and Regulatory Filings), and further activities related to development of such Collaboration Product. For clarity, Development shall exclude all Manufacturing and Commercialization processes and activities. “ Develop ” and “ Developing ” shall have their correlative meanings.

1.20 “ Development Plan ” shall mean, on an indication-by-indication basis, the Acne Plan, the Impetigo Plan and each Accepted Indication Plan, if any.

1.21 “ Development Program ” shall mean all activities conducted by or on behalf of the Parties in accordance with the Development Plans.

1.22 “ Excluded Field ” shall mean (i) any and all applications related to the genito-urinary, gastrointestinal, ophthalmological (including the eye) or otolaryngological (including the ear or nasal passages) systems or any other mucosal surfaces, (ii) any and all applications related to wound care, (iii) any and all applications related to the prevention or disinfection of pre-, peri- or post-surgical infections (it being understood that the reference to “post-surgical infections” shall not limit the license grant under Section 7.1.1(c)), and (iv) any and all cosmetic applications (it being understood that the reference to “cosmetic applications” shall not limit the license grant under Section 7.1.1(c)).

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1.23 “ FDA ” shall mean the United States Food and Drug Administration or any successor entity.

1.24 “ Field ” 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, but excluding onychomycosis, diseases and disorders of the hair and any and all Rare Diseases, collectively, the “ Dermatology Field ”), but shall exclude all Excluded Indications. For clarity, the Field excludes the Excluded Field. For purposes of the foregoing, “ Rare Diseases ” 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).

1.25 “ Formulation Technology ” shall mean technologies, materials or New Inventions used in the formulation of any Collaboration Compound hereunder to provide or to enhance properties thereof, including efficacy, durability, safety, ease of handling, compatibility, stability, bioavailability, solubility, delivery route or the like, together with any and all formulations comprising a Collaboration Compound with such technologies, materials or inventions. For clarity, Formulation Technology shall exclude for all purposes any and all active pharmaceutical ingredients themselves.

1.26 “ FTE ” shall mean a full time equivalent year (consisting of a total of 1,880 person hours per year) of research or development work on or related to the Development Program. Research and development work on or related to the Development Program shall include those tasks and activities described in the Development Plans, as applicable, together with related managerial and preparation activities.

1.27 “ FTE Rate ” shall mean [***] U.S. Dollars ($[***]) per year per FTE, subject to adjustment as set forth in Section 8.3.1

1.28 “ Galderma Formulation Technology ” shall mean any and all Formulation Technology Controlled by Galderma during the Agreement Term.

1.29 “ Galderma Know-How ” shall mean any and all Know-How Controlled by Galderma during the Agreement Term that is (i) used in the Development, Manufacture or Commercialization of a Collaboration Product in the Field, or (ii) otherwise made available to NovaBay hereunder.

1.30 “ Galderma Patents ” shall mean any and all Patents Controlled by Galderma during the Agreement Term (i) claiming (A) any Galderma Formulation Technology, (B) the composition or method of manufacture or use of any Collaboration Product, or (C) any New Invention, or (ii) that are otherwise necessary or useful for the development, manufacture or commercialization of any Aganocide Product.

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1.31 “ Galderma Technology ” shall mean the Galderma Formulation Technology, Galderma Know-How and Galderma Patents.

1.32 “ Galderma Territory ” shall mean all jurisdictions in the world other than those within the NovaBay Territory.

1.33 “ Generic Product ” shall mean, with respect to a Collaboration Product or Royalty-Bearing NovaBay Product in a particular country, a pharmaceutical product that is registered as a generic product pursuant to applicable Law in such country ( e.g ., the Abbreviated New Drug Application (ANDA) process as described in the U.S. Drug Price Competition and Patent Term Restoration Act of 1984 in the United States) and marketed for the same indication as such Collaboration Product or Royalty–Bearing NovaBay Product, as applicable, in such country, which pharmaceutical product has been granted appropriate approvals by the applicable Regulatory Authority to allow marketing thereof in such country.

1.34 “ GLP ” shall mean the then-current good laboratory practice (or similar standards) for the performance of laboratory activities for pharmaceutical products as are required by any Regulatory Authority in the applicable jurisdiction.

1.35 “ GMP ” shall mean the then-current good manufacturing practice (or similar standards) for the manufacture, handling and storage of pharmaceutical products applicable to a Collaboration Product as required by the Regulatory Filings and approvals for such Collaboration Product in the applicable jurisdiction, including any IND, MAA or Marketing Approval.

1.36 “ Impetigo Plan ” shall mean the then-current comprehensive plan (including timelines) for the following: (i) during the Initial Period, the Development of an Impetigo Product for the Galderma Territory through the completion of the first Phase II Clinical Trial with respect thereto including appropriate toxicology studies (the “ Impetigo POC ”), and (ii) during the Continuation Period, further Development of Impetigo Products in the Field for the Galderma Territory through to Marketing Approval therefor.

1.37 “ Impetigo Product ” shall mean any Collaboration Product that is labeled for (or Developed for) the treatment or prevention of impetigo in humans.

1.38 “ IND ” shall mean an investigational new drug application filed with the FDA, as more fully defined in 21 C.F.R. §312.3 or similar application ( i.e ., a filing that must be made prior to commencing clinical testing in humans) filed with a Regulatory Authority in another jurisdiction ( e.g ., clinical trial authorization (CTA)).

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1.39 “ Initial Period ” shall mean the period commencing on the Effective Date and expiring upon NovaBay’s receipt of the Continuation Fee.

1.40 “ Japanese Partner ” shall mean a Third Party to which NovaBay has granted rights to: (i) market and sell a Collaboration Product in the Field on such Third Party’s own behalf in Japan, or (ii) promote, co-promote or otherwise offer to sell a Collaboration Product on such Third Party’s own behalf in Japan. For clarity, Japanese Partner shall exclude distributors, wholesalers and resellers of Collaboration Products appointed by NovaBay that do not engage in any marketing of the Collaboration Products in Japan.

1.41 “ Know-How ” shall mean any and all information, tangible materials and New Inventions comprising (i) ideas, discoveries, inventions, improvements or trade secrets, (ii) techniques, methods, formulas, processes and Data, and (iii) compositions of matter, including Collaboration Compounds. Know-How shall exclude any Patent rights with respect thereto.

1.42 “ Law ” shall mean, individually and collectively, any and all laws, ordinances, orders, rules, rulings, directives and regulations of any kind whatsoever of any governmental or regulatory authority within the applicable jurisdiction.

1.43 “ Major Market ” shall mean any of the following: France, Germany, Italy, Spain, United Kingdom or the United States.

1.44 “ Manufacturing ” shall mean, with respect to Collaboration Products, any and all processes and activities conducted for the GLP or GMP manufacture of such Collaboration Products in final dosage form (but not the Collaboration Compound ( i.e ., the active pharmaceutical ingredient) therein in bulk or other form) for Development or Commercialization thereof, including formulating a Collaboration Compound into the final dosage form of the Collaboration Product incorporating such Collaboration Compound, packaging, labeling and other finishing activities, quality control and assurance testing, formulation development and other activities performed in support of the CMC (chemistry, manufacturing and controls, or equivalent) section of a Regulatory Filing, in each case with respect to such Collaboration Product. For clarity, Manufacturing shall exclude all Development and Commercialization processes and activities, as well as process and activities directed to the manufacture of Collaboration Compounds alone ( i.e ., not as part of a Collaboration Product). “ Manufacture ” shall have the correlative meaning.

1.45 “ Marketing Approval ” shall mean, with respect to a Collaboration Product for an indication within the Field in a particular jurisdiction, approval by the applicable Regulatory Authority of (i) an MAA for such Collaboration Product for such indication, together with pricing approval in jurisdictions where pricing is established by the Regulatory Authority or other governmental agency, and (ii) any marketing authorization for any device required for use of the Collaboration Product (as indicated on the label of the Collaboration Product), in each case required for Commercialization in such jurisdiction. Notwithstanding the foregoing, if approval of such MAA is not required in accordance with applicable Law to market the Collaboration Product in such jurisdiction, Marketing Approval shall be deemed to have occurred for a particular indication for a Collaboration Product in such jurisdiction upon the first commercial sale of such Collaboration Product in such jurisdiction with labeling for such indication.

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1.46 “ Marketing Approval Application ” or “ MAA ” shall mean a New Drug Application (as defined in 21 C.F.R. §314.50 et. seq.) or similar filing, or a comparable filing for authorization to initiate marketing activities in a jurisdiction other than the United States, in each case with respect to a Collaboration Product.

1.47 “ Marketing Partner ” shall mean a Third Party to which Galderma has granted rights to: (i) market and sell a Collaboration Product in the Field on such Third Party’s own behalf, or (ii) promote, co-promote or otherwise offer to sell a Collaboration Product in the Field on such Third Party’s own behalf, in each case in the Galderma Territory. For clarity, Marketing Partner shall exclude distributors, wholesalers and resellers of Collaboration Products appointed by Galderma that do not engage in any marketing of the Collaboration Products.

1.48 “ Multiple-Field Compound ” shall mean a Collaboration Compound for which NovaBay (itself or through one or more Third Parties) has initiated clinical development or commercialization for applications outside of the Field.

1.49 “ Net Sales ” shall mean the gross amounts invoiced for (i) Collaboration Products sold by Galderma, its Affiliates or Marketing Partners in the Galderma Territory or NovaBay, its Affiliates or Japanese Partners in Japan, or (ii) Royalty-Bearing NovaBay Products sold by NovaBay, its Affiliates or sublicensees (such Person selling such product, the “ Selling Party ”), in each case to independent, unaffiliated Third Parties and recognized in the accounting records of the Selling Party as gross sales, (A) less the following deductions to the extent related to such gross amounts: (I) normal and customary trade, cash, formulary discounts and other quantity discounts and allowances actually allowed and taken, (II) credits or allowances actually granted to the customer for damaged goods, returns, recalls, rebates or rejections of Collaboration Products or Royalty-Bearing NovaBay Products, (III) import, export, sales, use, excise and other consumption taxes and custom duties or tariffs, or ad valorem taxes (to the extent borne by Selling Party and separately stated on the invoice and included in the gross amounts), (IV) Third Party cash rebates and chargebacks related to sales of Collaboration Products or Royalty-Bearing NovaBay Products, to the extent allowed and taken by such Third Party, (V) freight, insurance and other transportation and handling fees, (VI) retroactive price reductions that are actually allowed or granted to and taken by Third Parties, (VII) compulsory payments and rebates directly related to the sale of Collaboration Products or Royalty-Bearing NovaBay Products, accrued, paid, or deducted pursuant to written agreements with Third Parties (including managed care agreements) or government regulations, (VIII) royalties or other similar fees paid for Third-Party intellectual property based on the sales of the applicable Collaboration Products or Royalty-Bearing NovaBay Products, (IX) bad debts computed and allocated in accordance with the applicable Accounting Standards, and (X) any other specifically identifiable costs or charges included in the gross amounts invoiced for such Collaboration Products or Royalty-Bearing NovaBay Products, as applicable, substantially equivalent to those listed in clauses (I) – (IX) above, and (B) with respect to (y) sales of Collaboration Products by Galderma to any Marketing Partner or by NovaBay to a Japanese Partner or (z) sales of Royalty-Bearing NovaBay Products by NovaBay to a sublicensee, plus in either case an additional amount reasonably determined by Galderma or NovaBay, as applicable, in good faith to gross up the actual amount invoiced for sale of the Collaboration Product or Royalty-Bearing NovaBay Product by Galderma or NovaBay, as applicable, in order to adjust such sales up to an amount corresponding to the gross amounts Galderma or NovaBay, as applicable, would have invoiced had Galderma or NovaBay, as applicable, made such sales directly to the end customer. In the event that a Selling Party makes any adjustment to deductions described in clause (A) above after the associated Net Sales have been reported pursuant to this Agreement, the adjustments and payment of any amounts due shall be reported with the next quarterly report due hereunder.

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1.49.1 A Collaboration Product or Royalty-Bearing NovaBay Product shall not be deemed sold if the Collaboration Product or Royalty-Bearing NovaBay Products, as applicable, is provided free of charge to a Third Party as a sample consistent with Selling Party’s normal promotional and sample practices and applicable Law in direct support of the promotion, marketing or other Commercialization of the Collaboration Product.

1.49.2 If a sale, transfer or other disposition of a Collaboration Product or Royalty-Bearing NovaBay Product, as applicable involves consideration other than cash or is not at arm’s length, then the Net Sales from such sale, transfer or other disposition shall be calculated from the average selling price for such Collaboration Product or Royalty-Bearing NovaBay Product during the calendar quarter in the country where such sale, transfer or disposition took place.

1.49.3 In the event a Selling Party sells any Collaboration Product as a Combination Product, Net Sales of such Combination Product shall be calculated by multiplying the Net Sales (as described above) of the Combination Product by the fraction A divided by (A+B), in which A is the Gross Selling Prices of Collaboration Compound(s) contained in the Combination Product sold separately in commercial quantities in arm’s-length transactions during the previous calendar quarter in the country where such Collaboration Product is sold, and B is the sum of the Gross Selling Prices of Other API(s) contained in the Combination Product sold separately in commercial quantities in arm’s-length transactions made during the previous calendar quarter in the country where such Collaboration Product is sold. In the event that no separate sales of either Collaboration Compound(s) or any Other API(s) contained in the Combination Product were made during the applicable calendar quarter in such country or if the Gross Selling Price cannot otherwise be determined, Net Sales allocable to the Collaboration Compound(s) and Other API(s) contained in the Combination Product shall be determined in good faith by the Parties. If such determination cannot be made, either Party may refer the issue to arbitration pursuant to Section 13.1. For purposes of the foregoing, “ Gross Selling Price ” means the weighted average gross price at which a product is sold to a Third Party, before discounts, deductions, credits, taxes or allowances; Gross Selling Price shall not take into consideration the price for any product sold or used for development purposes (including for clinical trials) or as samples or free goods (including product transferred in connection with patient assistance programs or other charitable purposes).

1.49.4 In the event that any Royalty-Bearing NovaBay Product is sold as a combination product, then the Net Sales of such Royalty-Bearing NovaBay Product shall be apportioned between the Collaboration Compound(s) therein and other active pharmaceutical ingredient(s) on a similar basis as described in Section 1.49.3.

1.50 “ North America ” shall mean Canada, Mexico and the United States and their territories and protectorates.

1.51 “ NovaBay Formulation Technology ” shall mean any and all Formulation Technology Controlled by NovaBay during the Agreement Term.

1.52 “ NovaBay Know-How ” shall mean any and all Know-How Controlled by NovaBay during the Agreement Term that is (i) used in for the Development, Manufacture or Commercialization of a Collaboration Product in the Field or (ii) otherwise made available to Galderma hereunder.

1.53 “ NovaBay Patents ” shall mean any and all Patents Controlled by NovaBay during the Agreement Term (i) claiming (A) the composition or method of manufacture or use of a Collaboration Compound, or (B) any New Invention, or (ii) that are otherwise necessary or useful for the Development, Manufacture or Commercialization of Collaboration Products, in each case within the Field.

1.54 “ NovaBay Technology ” shall mean the NovaBay Formulation Technology, NovaBay Know-How and NovaBay Patents.

1.55 “ NovaBay Territory ” shall mean those countries listed on Exhibit 1.55 .

1.56 “ NVC-[***] shall mean [***].

1.57 “ Patent ” shall mean any of the following, whether existing as of the Effective Date or during the Agreement Term anywhere in the world: (i) any issued patent, including inventor’s certificates, extensions, reissues, re-examination, renewal or any like governmental grant for protection of inventions, and (ii) any pending application for any of the foregoing, including any continuation, divisional, substitution, continuations-in-part, provisional and converted provisional applications.

1.58 “ Person ” shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization or government or political subdivision thereof.

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1.59 “ Phase II Clinical Trial ” shall mean any human clinical trial where a principal purpose is to determine preliminary evidence of efficacy and safety or to establish a dose or dose range for Phase III Clinical Trials of a Collaboration Product in a patient population that has the indication being studied (including any human clinical trial described in 21 C.F.R. §312.21(b) or, with respect to a jurisdiction other than the United States, a similar clinical trial). For clarity, Phase II Clinical Trial shall include any Phase IIa clinical trial.

1.60 “ Phase III Clinical Trial ” shall mean any human clinical trial that is intended to be a pivotal trial for seeking or obtaining a Marketing Approval or to otherwise establish safety and efficacy in patients with the indication being studied for purposes of filing an MAA (including any human clinical trial described in 21 C.F.R. §312.21(c), or, with respect to a jurisdiction other than the United States, a similar clinical trial).

1.61 “ Pivotal Trial ” shall mean with respect to a Collaboration Product in the Field, any clinical trial that, if the end point(s) therefor as set forth in the applicable protocol are met, is intended to support the filing of an MAA for such Collaboration Product in Japan. For clarity, a non-Phase III bridging study or a Phase III Clinical Trial can be a Pivotal Trial.

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

1.63 “ Regulatory Authority ” shall mean any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity with authority over the Development, Manufacture, Commercialization or other use (including the granting of Marketing Approvals) of any Collaboration Product in any jurisdiction, including the FDA, European Medicines Agency, any pertinent national European agency, and the Ministry of Health, Labor and Welfare or Pharmaceuticals and Medical Devices Agency in Japan.

1.64 “ Regulatory Filing ” shall mean any filing or application with any Regulatory Authority, including INDs and MAAs and authorizations, approvals or clearances arising from the foregoing, including Marketing Approvals, and all correspondence with such Regulatory Authority, as well as minutes of any material meetings, telephone conferences or discussions with such Regulatory Authority, in each case with respect to a Collaboration Product in the Field.

1.65 “ Royalty-Bearing NovaBay Products ” shall mean (i) any Collaboration Product sold in a country in the Galderma Territory in the Dermatology Field (but outside the Field) (A) for which the Marketing Approval Application for such Collaboration Product in such country includes material Data (other than Data related to safety) generated by or on behalf of Galderma, or (B) which is Covered by a Galderma Patent in such country (each, an “ In-Territory Product ”), (ii) any Collaboration Product sold in a country in the NovaBay Territory in the Field (A) for which the Marketing Approval Application for such Collaboration Product in such country includes material Data (other than Data related to safety) generated by or on behalf of Galderma, or (B) which is Covered by a Galderma Patent in such country (each, an “ Ex-Territory Product ”), or (iii) an Aganocide Product sold in any country outside the Field and Covered by a Galderma Patent in such country (each, an “ Ex-Field Product ”).

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1.66 “ Third Party ” shall mean any Person other than a Party or an Affiliate of a Party.

1.67 “ Valid Claim ” shall mean a claim of an issued and unexpired patent or a claim of a pending patent application that has not been held invalid or unenforceable by a court or other government agency of competent jurisdiction; provided , however , that if the holding of such court or agency is later reversed by a court or agency with overriding authority, the claim shall be reinstated as a Valid Claim with respect to Net Sales made after the date of such reversal.

1.68 Definitions . Each of the following terms shall have the meanings defined in the corresponding Section of this Agreement indicated below:

Definitions	Section
Acceptance	8.4.1(a)(i)
Accepted Indication	3.5.2 and 3.5.3
Accounting Standards	1.1
[***]	[***]
Acne Plan	1.3
Acne POC	1.3
Acne Product	1.4
Actual Labor Cost	Exhibit 6.1.4
Actual Materials Cost	Exhibit 6.1.4
Adverse Drug Reaction	1.2
Affiliate	1.5
Aganocide Compound	1.6
Aganocide Product	1.7
Agreement	Preamble
Agreement Term	12.1
Agreement Wind-Down Period	12.6.1
Alcon Agreement	11.2.14
Allocable Overhead	Exhibit 6.1.4
Annual Net Sales	8.5.6(a)
Anti-Bacterial Products	8.5.6(b)
Anti-Fungal Products	8.5.6(c)
Anti-Viral Products	8.5.6(d)
Base Patent	1.10
Board	6.4.2
Capture Period	1.8
[***]	[***]
Co-Chair	2.1.3

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Definitions

Section

Collaboration	1.9
Collaboration Compound	1.10
Collaboration Product	1.11
Combination Product	1.12
Commercialization	1.13
Commercialization Plan	4.2
Commercialize	1.13
Commercializing	1.13
Commercially Reasonable Efforts	1.14
[***]	[***]
[***]	[***]
[***]	[***]
Compound Improvement	9.1.2
Confidential Information	10.1
Constraints	3.5.6
Continuation Fee	8.2.1
Continuation Period	1.15
Control	1.16
Controlled	1.16
Controlling	1.16
Cooperating Party	10.4.2
Coordination Committee	2.1.1
Co-Chair	2.1.3
Co-Promote	4.4.1
Co-Promotion Plan	4.4.2(a)(i)
Cover	1.17
Covered	1.17
Covering	1.17
Data	1.18
Dermatology Field	1.24
Develop	1.19
Developing	1.19
Development	1.19
Development Plan	1.20
Development Program	1.21
Development Proposal	3.5.1
[***]	[***]
Dispute	13.1
Effective Date	Preamble
Enabling Party	6.2.3
Enforcement Action	9.4
Excluded Field	1.22

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Definitions

Section

Excluded Indication	3.5.7
Ex-Field Product	1.65
Existing Patent Rights	11.2.1
Ex-Territory Product	1.65
FDA	1.23
Field	1.24
Filing Party	6.2.3
First Negotiation Period	3.5.2
Formulation Feasibility Studies	1.3
Formulation Technology	1.25
FTE	1.26
FTE Rate	1.27
GAAP	1.1
Galderma	Preamble
Galderma Formulation Technology	1.28
Galderma Indemnitees	11.5.1
Galderma Know-How	1.29
Galderma Patents	1.30
Galderma Product Marks	9.7.1
Galderma Technology	1.31
Galderma Territory	1.32
Galderma Third Party Technology	9.5.2
Generic Competition	8.5.9(b)
Generic Product	1.33
GLP	1.34
GMP	1.35
Gross Selling Price	1.49.3
Healthcare Institutions	4.4
IFRS	1.1
Impetigo Plan	1.36
Impetigo POC	1.36
Impetigo Product	1.37
Impetigo Reimbursement Amount	8.2.2
IND	1.38
Indemnify	11.5.1
Infringing Product	9.4
Initial Period	1.39
initiation	8.4.1(a)(ii)
In-Process Collaboration Products	12.6.5(b)
In-Territory Product	1.65

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Definitions

Section

IP Subcommittee	2.1.2
JAMS	13.3
Japan Election Notice	5.1.1
Japanese Development Plan	5.1.1
Japanese Election Notice	5.1.3
Japanese Lead Party	5.1.1
Japanese Partner	1.40
Joint Patent	9.2.5
Know-How	1.41
Law	1.42
[***]	[***]
Losses	11.5.1
MAA	1.46
Major Market	1.43
Manufacture	1.44
Manufacturing	1.44
Manufacturing Cost	Exhibit 6.1.4
Marketing Approval	1.45
Marketing Approval Application	1.46
Marketing Partner	1.47
Material Adverse Event	8.7
Milestone Event	8.4
Milestone Payment	8.4
Multiple-Field Compound	1.48
Multiple-Field/Territory Product Substitution	2.4.2
Net Sales	1.49
New Invention	9.1.1
North America	1.50
Notice of Interest	3.5.6
NovaBay	Preamble
NovaBay Formulation Technology	1.51
NovaBay Indemnitees	11.5.2
NovaBay Know-How	1.52
NovaBay Logos	9.7.3
NovaBay Patents	1.53
NovaBay Product Marks	9.7.2
NovaBay Technology	1.54
NovaBay Territory	1.55
NovaBay Third Party Technology	9.5.1
NVC-[***]	[***]
Offer Notice	4.6

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Definitions

Section

Ordering Party	Exhibit 6.1.5
Other API	1.12
Other Products	8.5.6(e)
Parties	Preamble
Party	Preamble
Patent	1.57
Payee	8.9
Payor	8.9
Person	1.58
Phase II Clinical Trial	1.59
Phase III Clinical Trial	1.60
Pivotal Trial	1.61
Plan	2.2.1
PPOC	3.5.3
PPOC Notice	3.5.3
Pre-Pivotal Development	5.1.2
Pre-Pivotal Development Costs	5.1.3
Pre-Pivotal Japan Report	5.1.3
Primary Indications	1.62
prior	8.4.1(c)
Product	Exhibit 6.1.5
Project Team	2.2.2
Proposed Collaboration Products	12.6.5(b)
Proposed Indication	3.5.1
Prosecute and Maintain	0
Prosecution and Maintenance	0
Quality Agreement	Exhibit 6.1.5
Rare Diseases	1.24
Regulatory Authority	1.63
Regulatory Filing	1.64
Requesting Party	10.4.2
Royalty-Bearing NovaBay Products	1.65
Scale-up Costs	6.1.1
Second Negotiation Period	3.5.3
Selecting Party	3.7
Selling Party	1.49
Specification	Exhibit 6.1.5
[***]	[***]
Submitting Party	3.5.1
subsequent	8.4.1(c)
successful completion	8.4.1(a)(iii)

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Definitions

Section

Supply Agreement	6.1.5
Supplying Party	Exhibit 6.1.5
Terminated Product	12.7
Third Party	1.66
Third-Party Claim	11.5.1
Third Party Technology	9.5.3
Valid Claim	1.67

1.69 Interpretation . The captions and headings in this Agreement are for convenience only, and are to be of no force or effect in construing or interpreting any of the provisions of this Agreement. Unless specified to the contrary, references to Articles, Sections or Exhibits mean the particular Articles, Sections and Exhibits to this Agreement and references to this Agreement include all Exhibits hereto. Unless context otherwise clearly requires, whenever used in this Agreement: (i) the words “include” or “including” shall be construed as incorporating, also, “but not limited to” or “without limitation,” (ii) the word “day” or “year” shall mean a calendar day or year unless otherwise specified, (iii) the word “notice” shall mean notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (iv) the words “hereof,” “herein,” “hereby” and derivative or similar words refer to this Agreement (including any Exhibits), (v) the word “or” shall be construed as the inclusive meaning identified with the phrase “and/or,”(vi) provisions that require that a Party, the Parties or a committee hereunder “agree,” “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise, (vii) words of either gender include the other gender, (viii) words using the singular or plural number also include the plural or singular number, respectively, and (ix) references to any specific Law or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement thereof. For purposes of this Agreement, neither Party will be deemed to be acting “under authority of” the other Party; however, with respect to Galderma, its Affiliates, Marketing Partners and Third Party contractors shall be deemed to be acting “under authority of” Galderma, and with respect to NovaBay, its Affiliates, Japanese Partners, sublicensees (other than Galderma) and Third Party contractors shall be deemed to be acting “under authority of” NovaBay.

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ARTICLE II

GOVERNANCE; COORDINATION

2.1 Coordination Committee

2.1.1 Establishment

Promptly after the Effective Date, Galderma and NovaBay shall establish a coordination committee (the “ Coordination Committee ”) to review and coordinate the activities of the Parties hereunder, including the performance of the Development Program and the Development, Manufacture and Commercialization of Collaboration Products in the Field.

2.1.2 Responsibilities

The Coordination Committee shall be responsible for: (i) reviewing and approving all Development Plans (including applicable budgets therefor), subject to Section 2.1.5, (ii) reviewing and accepting or rejecting Development Proposals, (iii) providing strategic direction to the Parties’ activities under the Collaboration, (iv) reviewing and monitoring activities under the Development Plans and the progress thereof, (v) managing the integration and coordination of the Development Program (including the manufacture of Collaboration Compounds and Collaboration Products) and Commercialization of the Collaboration Products in the Field, (vi) facilitating access to and the exchange of information between the Parties related to the Collaboration Compounds and Collaboration Products in the Field, (vii) ensuring that the Development of the Collaboration Products in the Field for the Galderma Territory proceed in a coordinated and expeditious manner, (viii) establishing subcommittees as it deems appropriate to manage specific activities under the Collaboration (including subcommittee(s) for proposing, reviewing and coordinating strategies for Patent and other intellectual property matters consistent with Article IX (the “ IP Subcommittee ”)) and resolving disputes, disagreements and deadlocks of such subcommittees, and (ix) undertaking or approving such other matters as are specifically provided for the Coordination Committee under this Agreement.

2.1.3 Membership

The Coordination Committee shall be comprised of an equal number of representatives from each of NovaBay and Galderma. The exact number of such representatives shall be three (3) for each of Galderma and NovaBay, or such other number as the Parties may agree. Either Party may replace its respective Coordination Committee representatives at any time with prior notice to the other Party, provided that such replacement is of comparable authority and scope of functional responsibility within that Party’s organization as the individual he or she is replacing. Without limiting the foregoing, each Party shall appoint one of its members to the Coordination Committee to co-chair the meetings of the Coordination Committee (each, a “ Co-Chair ”). Each Co-Chair, working together, shall (i) coordinate and prepare the agenda and ensure the orderly conduct of the Coordination Committee’s meetings, (ii) attend (subject to below) each meeting of the Coordination Committee, and (iii) prepare and issue minutes of each meeting within ten (10) business days thereafter accurately reflecting the discussions and decisions of the Coordination Committee at such meeting. Such minutes from each Coordination Committee meeting shall not be finalized until the Co-Chair from each Party has reviewed and confirmed the accuracy of such minutes in writing. The Co-Chairs shall solicit agenda items from the other Coordination Committee members and provide an agenda along with appropriate information for such agenda reasonably in advance (to the extent possible) of any meeting. In the event the Co-Chair or another member of the Coordination Committee from either Party is unable to attend or participate in any meeting of the Coordination Committee, the Party who designated such Co-Chair or member may designate a substitute Co-Chair or other representative for the meeting.

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2.1.4 Meetings

Unless otherwise agreed by the Parties, the Coordination Committee will meet telephonically or in person at least once every four (4) months for so long as any Development of Collaboration Products with respect to any Major Market is ongoing, and semi-annually thereafter during the Agreement Term. The location of such meetings shall alternate between NovaBay’s headquarters and Galderma’s headquarters with the first meeting to be held as agreed to by the Parties. Each Party shall be responsible for its own expenses relating to such meetings. As appropriate, other employee representatives of the Parties may attend Coordination Committee meetings as nonvoting observers, but no Third Party personnel may attend unless otherwise agreed by the Parties. Each Party may also call for special meetings to resolve particular matters requested by such Party.

2.1.5 Decision Making

Decisions of the Coordination Committee shall be made by consensus of the members participating in any meeting, with at least one (1) representative from each Party participating in such vote; provided that (i) during the Initial Period, Galderma shall have the final say as to all aspects of the Formulation Feasibility Studies and otherwise as to the development and implementation of the Acne Plan and NovaBay shall have the final say as to the development and implementation of the Impetigo Plan, without limiting the second sentence of Section 3.2.2, (ii) during the Continuation Period, Galderma shall have the final say as to the implementation of the Development and Commercialization of the Collaboration Products in the Field for the Galderma Territory, except that (A) the Japanese Lead Party, with respect to a particular Collaboration Product, shall have final say as to the implementation of the Development of such Collaboration Product in the Field for Japan, and (B) the Commercialization of Collaboration Product in Japan shall be determined as set forth in Section 5.2, and (iii) NovaBay shall have the final say as to all matters likely to affect the Development or Commercialization of Multiple-Field Compounds outside of the Field. For clarity, in the event that the Coordination Committee is unable to reach consensus with respect to a matter not subject to either Party’s final say, then either Party may, by written notice to the other Party, refer such matter for dispute resolution in accordance with Article XIII. Notwithstanding anything herein to the contrary, the Coordination Committee shall not have any authority to amend, modify or waive compliance with any express term or condition of this Agreement.

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2.2 Day-to-Day Responsibilities

2.2.1 General

Each Party shall: (i) be responsible for day-to-day implementation and operations of the Development, Manufacturing and Commercialization activities with respect to Collaboration Compounds and Collaboration Products in the Field for which it has or is otherwise assigned responsibility under the applicable Plan or this Agreement, and (ii) keep the other Party reasonably informed as to the progress of such activities, as reasonably requested by the other Party. For purposes of this Agreement, “ Plan ” shall mean any of the Acne Plan, Impetigo Plan, Accepted Indication Plan or the Commercialization Plan, in each case then-currently in effect.

2.2.2 Project Teams

During the Initial Period and thereafter as the Parties may agree, NovaBay and Galderma shall establish project teams and subteams (with equal representation) composed as the Parties may agree (including teams for the Acne Plan and Impetigo Plan, respectively, each, a “ Project Team ”) to coordinate and oversee the day-to-day operations of the Parties on a Collaboration Product-by-Collaboration Product and indication-by-indication basis or as otherwise agreed by the Parties. Each Project Team shall have telephonic or physical meetings at least once per month (or as otherwise agreed by the Parties) with the operational management team from each Party responsible for the oversight and management of the activities within the purview of such Project Team. One goal of such meetings shall be to ensure that the expertise and resources of both Parties is brought to bear upon the performance of such activities. At each such meeting, each Party will provide an update of the status of the activities under the applicable Plan (including activities that are completed, under way or scheduled). Each Party shall be responsible for its own expenses relating to such meetings. Without limiting the foregoing, each Party shall designate a member of its internal project team and such members will coordinate periodically regarding the activities under the Acne Plan and Impetigo Plans.

2.3 Information Sharing

Without limiting the other provisions of this Agreement, each Party will keep the other reasonably informed on a timely basis as to the plans for and results of the activities of the Collaboration carried out by or under authority of such Party through the Coordination Committee and Project Teams. In addition, NovaBay will keep Galderma informed on a timely basis with respect to plans for and results of activities for Multiple-Field Compounds outside of the Field carried out by or under authority of NovaBay through the Coordination Committee and Project Teams.

2.4 Coordination

2.4.1 General

The Parties acknowledge and agree that NovaBay (itself or through its designees) shall have, subject to the terms and conditions of this Agreement (including Section 3.5) and the licenses granted herein, the right to perform activities with respect to Aganocide Compounds, and development, manufacture and commercialization activities with respect to Aganocide Compounds and Aganocide Products (including Collaboration Products) for applications outside of the Field at NovaBay’s expense. Accordingly, the Parties, through the Coordination Committee, shall use good faith efforts to coordinate the development of Collaboration Compounds for use in the Field hereunder with such activities of NovaBay (and its designees) outside the Field, so as to minimize the duplication of efforts and maximize quality and effectiveness of such activities, and avoid conflicts with Development Programs and activities outside the Field. Without limiting the foregoing and in order to facilitate coordination of the development of Collaboration Compounds outside the Field, NovaBay shall keep Galderma informed on a timely basis with respect to development plans for Collaboration Compounds to be conducted by or under authority of NovaBay, including proposed clinical plans and protocols, and give Galderma a reasonable opportunity to review and comment upon such proposed plans and protocols. In addition, NovaBay agrees to keep Galderma, through the Coordination Committee, reasonably informed of its planned discovery activities and development activities outside of the Field with respect to products incorporating Collaboration Compounds to allow for such coordination.

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2.4.2 Minimization of Substitutability

In order to reduce the chances that quantities of Collaboration Products sold by Galderma or its Affiliates, or their distributors in the Field will be used for any application outside the Field in the Galderma Territory, and similarly that products incorporating Multiple-Field Compounds sold outside of the Field (and without limiting the Parties’ obligations, with respect to products incorporating Multiple-Field Compounds for wound-healing applications) will be used in the Field in the Galderma Territory, including via parallel importation (any, a “ Multiple-Field/Territory Product Substitution ”), the Parties shall work together in good faith, through the Coordination Committee to develop unique packaging, trademarks and names, and, to the extent practicable, formulations, for Collaboration Products in the Field in the Galderma Territory and products incorporating Multiple-Field Compounds outside of the Field, with the goal of reducing the risk of Multiple-Field/Territory Product Substitutions. In the event that a Party believes that a Multiple-Field/Territory Product Substitution has adversely affected the Commercialization of a Collaboration Product by such Party in accordance with this Agreement, then it may notify the other Party and provide reasonable evidence of such Multiple-Field/Territory Product Substitution. Promptly after receipt of such notice, the Parties shall negotiate in good faith an appropriate adjustment, if any, to the economic terms of this Agreement to address such Multiple-Field/Territory Product Substitution.

2.4.3 Japan

NovaBay acknowledges and agrees that Galderma shall not be required to make changes to any of the Development Plans for any Collaboration Product unless and until Galderma is the Japanese Lead Party for such Collaboration Product in order to meet the requirements of applicable Law of Japan in connection with the Japanese Development Plan.

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ARTICLE III

DEVELOPMENT PROGRAM

3.1 General

NovaBay shall have primary responsibility for (i) all chemistry discovery and optimization activities with respect to Aganocide Compounds, and (ii) the conduct of the Impetigo POC; and Galderma shall have primary responsibility for all other activities with respect to the Development of the Collaboration Products in the Field for the Galderma Territory, including any formulation activities with respect thereto. Without limiting the foregoing, each Party shall (A) communicate with, seek advice from, and keep the other Party reasonably informed on a regular basis with respect to activities for which it has primary responsibility pursuant to the prior sentence, and (B) use the expertise of the other Party in connection therewith. Upon either Party’s reasonable request, the other Party agrees to make available appropriate employees and personnel to discuss any reasonable questions or comments of such Party with respect to the other Party’s Development of such Collaboration Products, provided that doing so will not materially interfere with the conduct of such other Party’s business or require such other Party to incur any material expenses.

3.2 During the Initial Period

3.2.1 Acne

Galderma shall, at its own expense, use Commercially Reasonable Efforts to complete the activities assigned to it under the Acne Plan within the time frames set forth therein.

3.2.2 Impetigo

NovaBay shall, at its own expense (except as provided in Section 8.2.2), use Commercially Reasonable Efforts to complete the activities assigned to it under the Impetigo Plan within the time frames set forth therein. The Parties acknowledge that during the Continuation Period Galderma may consider and use (if it so elects) a different formulation of the Impetigo Product for the Galderma Territory than the one used by NovaBay in the conduct of the Impetigo POC.

3.3 During the Continuation Period

During the Continuation Period, for each Primary Indication and Accepted Indication, Galderma shall, at its expense, take the lead and be responsible for conducting such Development activities, including clinical trials, as may be reasonably necessary to obtain Marketing Approvals for Collaboration Products for each Primary Indication and Accepted Indication throughout the Galderma Territory (except for Japan, which shall be in accordance with Section 5.1), all in accordance, in all material respects, with the applicable Development Plan therefor (including the applicable timelines for specific activities).

3.4 Diligence

Each Party shall conduct its responsibilities under the Development Program as assigned to it under the Development Plans, in accordance with good scientific and clinical practices, and in compliance in all material respects with all applicable Law and regulatory standards, and shall use Commercially Reasonable Efforts to achieve the objectives and timelines within the Development Plans.

***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions h

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