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.
 

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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

***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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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

***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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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
 

***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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TABLE OF CONTENTS
(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

***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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TABLE OF CONTENTS
(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

***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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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 [***]
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

***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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TABLE OF CONTENTS
(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 [***]
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

***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.
 
-vii-
 

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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
-viii-
 

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.
 
***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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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.
 
***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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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.
 
***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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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)).
 
***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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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.
 
***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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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)).
 
***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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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.
 
***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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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.
 
***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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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.
 
***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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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”).
 
***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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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

***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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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

***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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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

***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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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

***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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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)

***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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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.
 
***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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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.
 
***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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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.
 
***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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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.
 
***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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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.
 
***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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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
have been filed separately with the Commission.

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3.5 Development Proposals
 
 
3.5.1 General
 
.  Either NovaBay or Galderma (the “Submitting Party”) may submit to the other
Party a proposal to develop Collaboration Product(s) for one or more specific
indications in addition to the Primary Indications in the Field (each, a
“Development Proposal”); provided that a Development Proposal for such
indication(s) have not been previously submitted under this Section 3.5.  Each
Development Proposal shall set forth (i) the specific indication(s) (each, a
“Proposed Indication”), (ii) proposed labeling for such Proposed Indication(s),
(iii) market and economic return potential for such Proposed Indication(s),
(iv) any intellectual property, medical or clinical, or market considerations,
in each case specific to the Proposed Indication(s), (v) a general plan for
Development of the Collaboration Products for such Proposed Indication(s) in the
Major Markets, and (vi) such other existing documentation, data and information,
in each case in the Control of the Submitting Party, useful, as reasonably
determined by the Submitting Party, to the other Party in determining its
interest in the Proposed Indication.
 
3.5.2 First Negotiation
 
  If Galderma is the Submitting Party or if NovaBay is the Submitting Party and
Galderma notifies NovaBay that it is interested in Developing a Collaboration
Product for the Proposed Indication(s) within the Field within [***] days of the
applicable Development Proposal, then the Parties shall negotiate for a period
of [***] days (the “First Negotiation Period”) the terms and conditions for such
Development hereunder, including appropriate economic terms; provided that if
proposed by Galderma in writing, NovaBay shall be required to agree to the
economic terms set forth in Section 3.5.4.  If Galderma proposes the economic
terms set forth in Section 3.5.4 for such Proposed Indication(s) or the Parties
otherwise agree on different terms and conditions for the Proposed
Indication(s), the Parties shall execute an amendment to this Agreement setting
forth such terms and conditions (including the Accepted Indication plan for such
Proposed Indication(s) (the “Accepted Indication Plan”)) and each such Proposed
Indication shall be deemed an “Accepted Indication” for purposes of this
Agreement.
 
3.5.3 PPOC Notice
 
  If any Proposed Indication has not become an Accepted Indication under
Section 3.5.2 and NovaBay is the Submitting Party of a Development Proposal
prior to the achievement of PPOC for such Proposed Indication, then upon
achievement of PPOC for a Collaboration Product for such Proposed Indication,
NovaBay shall promptly notify Galderma and provide Galderma a copy of the PPOC
results and other existing information relevant thereto, including
pharmacodynamic, pharmacokinetic, toxicology and other pharmaceutical data
Controlled by NovaBay (the “PPOC Notice”).  If Galderma notifies NovaBay that it
is interested in Developing a Collaboration Product for the Proposed
Indication(s) within the Field within [***] days of such PPOC Notice, then the
Parties shall negotiate for a period of [***] days (the “Second Negotiation
Period”) the terms and conditions for such Development hereunder, including
appropriate economic terms; provided that if proposed by Galderma in writing,
NovaBay shall be required to agree to the economic terms set forth in
Section 3.5.4.]  If Galderma proposes the economic terms set forth in
Section 3.5.4 for such Proposed Indication(s) or the Parties otherwise agree on
different terms and conditions for the Proposed Indication(s), the Parties shall
execute an amendment to this Agreement setting forth such terms and conditions
(including the Accepted Indication Plan for such Proposed Indication(s)) and
each such Proposed Indication shall be deemed an “Accepted Indication” for
purposes of this Agreement.  For purposes of the foregoing, “PPOC” (Preliminary
Proof of Concept) shall mean a positive signal for the Proposed Indication from
a pre-clinical study commonly accepted for the Proposed Indication.
 
***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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3.5.4 Preset Terms
 
  If Galderma proposes the following economic terms for the Proposed
Indication(s) under either Section 3.5.2 or Section 3.5.3, NovaBay shall agree
thereto and such Proposed Indication(s) shall be deemed Accepted Indication(s):
 
(a) milestone payments consistent with those set forth in Section 8.4 for the
Impetigo Product based on the potential market size for such Proposed
Indication(s) in comparison to the market size for the Impetigo Product, but no
more than one hundred fifty percent (150%) or less than sixty-six percent (66%)
of the Milestone Payments for the Impetigo Product;
 
(b) a payment payable upon the later of (i) acceptance of the Development
Proposal, and (ii) payment of the Continuation Fee, equal to (A) twenty-five
percent (25%) of the cumulative milestones established in accordance with
Section 3.5.4(a) above for the each such Development Proposal accepted by
Galderma, and (B) an amount equal to NovaBay’s reasonable and documented costs
incurred in Developing a Collaboration Product for such Proposed Indication(s)
prior to the payment of the Continuation Fee, provided that such costs were
incurred in accordance with a budget approved by the Coordination Committee as
set forth herein and calculated based on the FTE Rate;
 
(c) a maximum credit amount for purposes of Section 8.5.8(b) of one hundred
twenty-five percent (125%) of the cumulative milestones established in
accordance with Section 3.5.4(a) for such Development Proposal; and
 
(d) royalties based on the particular category of Collaboration Product (i.e.,
Acne Product, Anti-Bacterial Product, Anti-Fungal Product, Anti-Viral Product or
Other Product) as set forth in Section 8.5.2 through 8.5.5, as applicable.
 
3.5.5 Inability to Agree on Terms
 
  Without limiting Galderma’s right under Section 3.5.4 to require NovaBay’s
agreement of a Development Proposal and the corresponding Proposed Indication(s)
as Accepted Indication(s), if the Parties are unable to agree on  terms and
conditions for any reason prior to the expiration of the First Negotiation
Period, if Galderma is the Submitting Party, or prior to the expiration of the
Second Negotiation Period, if NovaBay is the Submitting Party, then NovaBay
(itself or through one or more Third Parties) may Develop and Commercialize
Collaboration Products for such Proposed Indication(s) in the Galderma Territory
subject to the provisions of this Agreement, including Section 2.4.2 and
Section 7.1.2 and provided that NovaBay does not offer such Development Proposal
to a Third Party on terms and conditions, when taken as a whole, that are less
favorable to NovaBay than those last offered to or by Galderma, as applicable,
with respect to such Development Proposal.
 
***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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3.5.6 Failure to Respond
 
  If NovaBay is the Submitting Party and Galderma does not notify NovaBay of its
interest in the Proposed Indication(s) within [***] of NovaBay’s submission of
the applicable PPOC Notice, then NovaBay (itself or through one or more Third
Parties) may Develop and Commercialize Collaboration Products for such Proposed
Indication(s) in the Galderma Territory without further obligation to Galderma
subject to the provisions of this Agreement, including Section 2.4.2 and
Section 7.1.2; provided that notwithstanding anything herein to the contrary
Galderma shall be under no obligation to consider any Development Proposal and
NovaBay shall not have such right to Develop and Commercialize if with respect
to a particular calendar year (i) Galderma has accepted [***] Development
Proposals (including Development Proposals relating to the Primary Indications)
in such calendar year or (ii) NovaBay has presented Galderma with [***]
Development Proposals in such calendar year.  Further and without limiting the
previous sentence, if Galderma notifies NovaBay that is interested in pursuing
the Development of a Collaboration Product for a Proposed Indication within
[***] days of NovaBay’s submission of the applicable PPOC Notice (a “Notice of
Interest”), and (A) at the time thereof, has [***] or more separate ongoing
programs for the Development of Collaboration Products (including programs for
the Development of Collaboration Products for the Primary Indications) and
(B) notifies in the Notice of Interest that it has financial or capacity
constraints as Galderma has determined in good faith that prevent it from
undertaking additional programs for the Development of another Collaboration
Product (collectively, “Constraints”), then the Coordination Committee shall
promptly meet to identify approaches to address such Constraints (by way of
example, but not limited to, seek Third Party financing (whether from
traditional financing or other sources) or engage a contract developer) so as to
allow a Collaboration Product for such Proposed Indication to be Developed for
the Field for the Galderma Territory in a timely fashion.  For clarity, Galderma
shall have the final decision on whether to adopt any particular method of
addressing the Constraints.  If after [***] months from the Notice of Interest,
such Proposed Indication is not an Accepted Indication, then NovaBay shall have
the right to Develop and Commercialize Collaboration Products for such Proposed
Indication in the Galderma Territory, subject to Section 3.5.8 and the other
provisions of this Agreement.
 
3.5.7 Excluded Indications
 
  Each Proposed Indication that does not become an Accepted Indication pursuant
to this Section 3.5 shall be deemed an “Excluded Indication” for purposes of
this Agreement.
 
3.5.8 Conflicts
 
  If Galderma believes that NovaBay’s Development or Commercialization of a
Collaboration Product for a Proposed Indication is likely to have a material
adverse impact on the Development or Commercialization of Collaboration Products
in the Galderma Territory for either Primary Indication or any Accepted
Indication, then Galderma shall notify NovaBay thereof within thirty (30) days
of expiration of the Second Negotiation Period (or if Galderma is not interested
in the Proposed Indication, then within fifteen (15) days of submission of the
applicable Development Proposal) setting forth in writing the reasonable basis
for such belief.  In such case, NovaBay shall not proceed with the Development
and Commercialization of a Collaboration Product for such Proposed Indication in
the Galderma Territory, unless the Parties can agree upon appropriate protective
measures to be taken to minimize the chances of such impact, including by taking
the actions required by Section 2.4.2.  If NovaBay disagrees with Galderma’s
assessment, then NovaBay may initiate an arbitration pursuant to Section 13.3
with respect thereto.
 
***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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3.5.9 Expenses
 
  Except as otherwise agreed by the Parties or as provided in Section 3.5.4 or
Section 8.3.1, any activities of NovaBay under this Section 3.5 shall be at the
expense of NovaBay.
 
3.6 Development Plans
 
 
3.6.1 Establishment
 
  A proposed initial Acne Plan and Impetigo Plan for the Initial Period shall be
provided by Galderma and NovaBay, respectively, to the Coordination Committee
within thirty (30) days of the Effective Date and, subject to the approval
thereof by Coordination Committee, shall be attached to this
Agreement.  Accordingly, the Coordination Committee shall meet within thirty
(30) days of the provision of such Development Plans to the Coordination
Committee to discuss and approve such Development Plans.  If the Coordination
Committee is unable to reach consensus with respect to a Development Plan during
such thirty (30) day period, then the applicable Party shall have the right to
exercise its final say with respect thereto in accordance with Section 2.1.5 and
the Development Plan as determined by such Party shall then be attached to this
Agreement.  Beginning with the first year of the Continuation Period, Galderma
shall prepare a full Development Plan for each Primary Indication and Accepted
Indication and submit such plan to the Coordination Committee for its review and
approval and the Coordination Committee shall meet and approve such Development
Plans following the same procedures as described above with respect to the
initial plans.  Galderma shall update such Development Plan at least annually on
or before each October 31st and submit such updated plan to the Coordination
Committee for its review and approval following the same procedures.  For
clarity, any material modification to any such Development Plan(s) shall be
subject to the review and approval of the Coordination Committee following the
same procedures.  Notwithstanding anything herein to the contrary, each
Development Plan shall be aimed at fulfilling each Party’s obligations to use
Commercially Reasonable Efforts hereunder.
 
3.6.2 Contents
 
  The Development Plans described in Section 3.6.1 above shall contain
information with a level of detail consistent with Galderma’s practice or, in
the case of the Impetigo Plan for the Initial Period, Novabay’s practice in
preparing development plans for products similar to the Collaboration
Products.  In addition, Galderma shall provide NovaBay through the Coordination
Committee with copies of proposed clinical trial protocols, investigator
brochures, clinical trial analyses and reports, and material correspondence
(including all Regulatory Filings) with Regulatory Authorities with respect to
each Collaboration Product.  In any event, and without limiting the foregoing,
Galderma shall provide the Coordination Committee with a copy of the clinical
plan and protocols for each proposed clinical trial for a Collaboration Product
reasonably in advance of the initiation of such activities for review and
comment by the Coordination Committee; provided, however, Galderma will have the
final say in the design and conduct of such clinical plan and clinical trials
for Collaboration Products in the Field for the Galderma Territory.
 
***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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3.7 Disclosure of Formulation Technology
 
  Each Party shall disclose to the other Party any Formulation Technology used
in the Development of Collaboration Products hereunder, together with all
obligations (including payments) owed to any Third Party associated
therewith.  Subject to the terms and conditions of this Agreement, Galderma
shall have the right to select the appropriate Formulation Technology for use in
the Development (except for the Impetigo POC) and Commercialization of
Collaboration Products in the Field for the Galderma Territory and NovaBay shall
have the right to select the appropriate Formulation Technology for use in the
Development and Commercialization of Collaboration Products for the NovaBay
Territory and outside the Field for the Galderma Territory.  In the event a
Party selects a Formulation Technology for use with a Collaboration Product in
accordance with the previous sentence (the “Selecting Party”) and such use of
the Formulation Technology hereunder is subject to payment obligations to a
Third Party by the other Party (which were previously disclosed), then the
Selecting Party shall reimburse the other Party such amounts payable to such
Third Party arising from the use of such Formulation Technology in accordance
with Section 8.9.  Upon request of either Party, the Parties shall enter into a
separate agreement documenting the terms and conditions of the Selecting Party’s
rights and obligations under a specific Formulation Technology, including the
payments with respect thereto.  If the agreement with a Third Party pursuant to
which the applicable Party first obtained rights to such Formulation Technology
requires that a particular provision be incorporated in a sublicense granted
thereunder, such provision shall be deemed incorporated by reference herein only
to the extent so required and with respect to the subject matter of such
agreement.
 
3.8 Subcontractors
 
  Either Party may perform some or all of its obligations under the Development
Program through one or more subcontractors or Affiliates; provided that (i) none
of the rights of the other Party hereunder are diminished or otherwise adversely
affected as a result of such subcontracting or use of Affiliates, and (ii) the
subcontractor or Affiliate has entered into a written agreement with the Party
binding such Person to the obligations the responsible Party has to the other
Party, including obligations of intellectual property assignment and
confidentiality and non-use, and containing any other provisions normal and
customary for similar types of agreements; and further provided that, the
responsible Party shall at all times be responsible for the satisfactory
accomplishment of its obligations in accordance with, and the Third Party’s or
Affiliate’s compliance with, the terms and conditions of this Agreement.
 
ARTICLE IV
 

 
COMMERCIALIZATION OF COLLABORATION PRODUCTS
 
4.1 Commercialization
 
  Subject to the terms and conditions of this Agreement, as between the Parties,
Galderma shall have the exclusive (except as provided in Section 4.4) right to
Commercialize Collaboration Products in the Field in the Galderma
Territory.  Without limiting the foregoing, Galderma agrees to use Commercially
Reasonable Efforts to launch Collaboration Products in the Field as soon as
practicable in each Major Market, and thereafter to use Commercially Reasonable
Efforts to Commercialize such Collaboration Products in the Field in the
Galderma Territory.  It is understood and agreed that, except as otherwise
expressly provided herein, all Commercialization efforts for the Collaboration
Products in the Field in the Galderma Territory shall be at the sole expense of
Galderma.
 
***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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4.2 Commercialization Plan
 
 At least eighteen (18) months in advance of the launch of each Collaboration
Product in the Field in the Galderma Territory, Galderma shall propose an
initial plan for the Commercialization of such Collaboration Product in the
Field in the Galderma Territory (each, a “Commercialization Plan”).  The
Commercialization Plan shall be updated at least annually by Galderma.  Galderma
shall provide each such Commercialization Plan and any material modification or
addition thereto to NovaBay for its review and comment.  The Parties acknowledge
that the comments from NovaBay with respect to any Commercialization Plan are
solely advisory in nature and that Galderma shall have the final say relative to
the Commercialization Plan; nonetheless, Galderma shall consider in good faith
the comments of NovaBay with respect thereto.
 
4.3 Galderma Marketing Partners
 
          4.3.1 General
 
  Subject to the terms and conditions of this Agreement, including
Section 4.3.2, Galderma shall have the right, at any time with respect to
countries other than the Major Markets, and with respect to the Major Markets,
beginning [***] years after the first commercial sale of such Collaboration
Product in the Field within such Major Market, to grant sublicenses under its
license set forth in Section 7.1.1 to one or more Marketing Partners.  Galderma
may grant such sublicenses to Marketing Partners in Major Markets earlier than
[***] years after such first commercial sale if Galderma obtains NovaBay’s prior
written consent, which consent shall not be unreasonably withheld, delayed or
conditioned.
 
4.3.2 Conditions
 
  Galderma shall only have the right to grant such sublicenses to Marketing
Partners in accordance with Section 4.3.1 pursuant to a written agreement that
is consistent with the terms hereof and Galderma shall be responsible for the
compliance of such Third Party with the applicable terms of such agreement and
of this Agreement.
 
4.4 NovaBay’s Right to Co-promote to Healthcare Institutions in North America
 
  Subject to the terms and conditions of this Agreement and without limiting
NovaBay’s other rights hereunder, NovaBay shall have the right to Co-Promote
each Collaboration Product to Healthcare Institutions in the Field in North
America through its own sales force, except as otherwise provided in this
Section 4.4.  For purposes of this Agreement, “Healthcare Institutions” shall
mean all hospitals, nursing homes, long-term care facilities, dialysis centers,
home health care organizations and similar facilities, centers and
institutions.  Healthcare Institutions shall also include surgicenters and acute
care centers on a Collaboration Product-by-Collaboration Product basis to the
extent that at the time NovaBay exercises its right to Co-Promote such
Collaboration Product Galderma does not have a plan to market or sell products
to such particular surgicenters or acute care centers.  For the avoidance of
doubt, Galderma shall be permitted to make sales calls and presentations at
dermatology residency programs, teaching or academic hospitals and similar
facilities, centers and institutions.
 
***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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4.4.1 Co-Promote
 
  “Co-Promote” shall mean to jointly promote a Collaboration Product through
Galderma and NovaBay’s respective sales forces under a single trademark in a
given country, including conducting details and other sales and promotional
activities, with Galderma taking the lead in managing such activities and
booking sales of the Collaboration Product and handling the distribution of the
Collaboration Product. “Co-Promotion” shall have the correlative meaning.
 
4.4.2 Exercise
 
  To exercise its right to Co-Promote a particular Collaboration Product to
Healthcare Institutions in North America, NovaBay shall notify Galderma within
ninety (90) days of receipt of the Commercialization Plan with respect to such
Collaboration Product for North America pursuant to Section 4.2 and provide
Galderma a plan to Co-Promote such Collaboration Product to Healthcare
Institutions in North America.  In the event NovaBay exercises the Co-Promotion
Option with respect to a particular Collaboration Product, the provisions of
this Section 4.4 shall apply with respect thereto.
 
(a) Upon NovaBay’s exercise of the Co-Promotion Option with respect to a
Collaboration Product:
 
(i) The Parties shall cooperate to coordinate the Co-Promotion activities under
this Section 4.4, and shall promptly agree upon a sales and marketing plan for
such Collaboration Product for Healthcare Institutions in North America
consistent with the Commercialization Plan to be provided by Galderma under
Section 4.2 and the plan provided by NovaBay for promotion to the Healthcare
Institutions in North America under Section 4.4.2 for such Collaboration
Product  (the “Co-Promotion Plan”), which shall include detailed plans and
budgets for performance of activities for such Collaboration Product with
respect to specific institutions, and provide at all times for NovaBay sales
personnel to conduct material activities in such regards.
 
(ii) NovaBay shall be responsible for the hiring of its sales personnel
performing Co-Promotion activities for such Collaboration Product to the
Healthcare Institutions hereunder, and may subcontract its Co-Promotion
obligations to a Third Party, subject to Galderma’s approval not to be
unreasonably withheld, delayed or conditioned; provided that NovaBay shall
remain ultimately responsible for the performance thereof.  In all events,
NovaBay’s Co-Promotion activities shall be conducted in accordance with the
Co-Promotion Plan for the applicable Collaboration Product.  Galderma (or its
Marketing Partner) shall provide to NovaBay’s sales personnel, at Galderma’s
expense, such Collaboration Product-specific training and promotional materials
(including samples) as are reasonably necessary to effectively promote the
particular Collaboration Product consistent with the Co-Promotion Plan and
consistent with the training and materials provided to Galderma’s (or its
Marketing Partner’s) sales personnel promoting the Collaboration Product in
North America in the Field to Healthcare Institutions.
 
***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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(iii) If NovaBay exercises its option to Co-Promote a Collaboration Product,
Galderma and NovaBay shall enter into good faith negotiations to conclude a
definitive agreement, within sixty (60) days of NovaBay’s notice thereof, which
will outline in more detail the overall framework for the Co-Promotion
activities of the Parties with respect thereto, including roles and
responsibilities of each Party, consistent with the provisions of this
Section 4.4 and incorporating terms and conditions standard and customary in the
pharmaceutical industry for such arrangements.  Galderma shall pay NovaBay the
royalties as set forth in Section 8.5.7 in consideration for its activities
under the Co-Promotion Plan(s).
 
(b) If NovaBay desires to terminate its Co-Promotion of any Collaboration
Product, and its obligations under this Section 4.4 with respect to such
Collaboration Product, on a Collaboration Product-by-Collaboration Product basis
it shall notify Galderma and the Parties shall negotiate a plan for such
termination and transition with the goal of ensuring that the Healthcare
Institutions will continue to receive such Collaboration Product and such
termination and transition occur as expeditiously as practicable under the
circumstances.  NovaBay shall reimburse Galderma for any and all reasonable and
documented expenses that Galderma incurs in connection with such
termination.  From and after the effective date of such termination by NovaBay:
(i) NovaBay shall have no further right to payment by Galderma under
Section 8.5.7 with respect to the terminated Collaboration Product, other than
for Net Sales thereof prior to the effective date of termination, and
(ii) NovaBay shall have no further right to exercise its right to Co-Promote
such Collaboration Product hereunder.
 
4.5 Cooperation and Consultation
 
  Each Party agrees to cooperate and consult with the other Party in good faith,
at such other Party’s request, with respect to the activities contemplated in
Section 4.1 or Section 4.4, as applicable.
 
4.6 Galderma First Right of Negotiation
 
  Without limiting NovaBay’s exclusive right to Commercialize the Collaboration
Products in the Field in the NovaBay Territory, if NovaBay elects to engage one
or more Third Parties to Commercialize a Collaboration Product in the Field in
any country within the NovaBay Territory marked by an asterisk (*) on
Exhibit 1.55, then prior to negotiating with any Third Party with respect
thereto, NovaBay shall provide written notice to Galderma of its interest in
engaging a Third Party to Commercialize a Collaboration Product in the Field and
referencing this Section 4.6 and specifying the Product and the specific
country(ies) (the “Offer Notice”).  If Galderma notifies NovaBay within
forty-five (45) days of the date of the Offer Notice that it desires to
negotiate with NovaBay for it to Commercialize such Collaboration Product in the
Field in such country, the Parties shall negotiate for a period of sixty (60)
days.  If (i) upon the expiration of such negotiation period, the Parties have
not entered into a definitive agreement, (ii) Galderma notifies NovaBay that it
does not so desire to negotiate, or (iii) Galderma fails to notify NovaBay
within the forty-five (45) days of the date of the Offer Notice, in each case
with respect to the Commercialization such Collaboration Product in the Field in
such country(ies), NovaBay shall have the right to offer the Commercialization
of such Collaboration Product in the Field in such country(ies) to Third Parties
without further obligation to Galderma hereunder.
 
***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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ARTICLE V
 
DEVELOPMENT AND COMMERCIALIZATION IN JAPAN
 
5.1 Development in Japan
 
 
5.1.1 Japan Election Notice
 
  During the Continuation Period, on or before the initiation of first-in-man
clinical trials for a particular Collaboration Product, Galderma shall provide
NovaBay notice of whether it intends to proceed with Development of such
Collaboration Product through to completion of a clinical trial able to support
initiation of a Pivotal Trial for such Collaboration Product in the Field with
respect to Japan (the “Japan Election Notice”).  If Galderma so elects to
proceed, then together with such Japan Election Notice, Galderma shall provide
the Coordination Committee a plan for such Development for such Collaboration
Product consistent with the requirements for Development Plans for Collaboration
Products in the Field otherwise in the Galderma Territory for approval
consistent with Section 2.1.5 and Section 3.6 (each, a “Japanese Development
Plan”) and Galderma shall be the “Japanese Lead Party.”  If Galderma fails to so
elect (including by failure to provide the Japan Election Notice in a timely
manner), then NovaBay (itself or through a Japanese Partner) may proceed with
such Development, in which case NovaBay shall provide the Coordination Committee
the Japanese Development Plan for approval consistent with Section 2.1.5 and
Section 3.6 and shall be the Japanese Lead Party, subject to the provisions of
this Section 5.1.
 
5.1.2 Pre-Pivotal Development
 
  The Japanese Lead Party shall, at its expense, take the lead and be
responsible for conducting such Development activities, including appropriate
chronic toxicology and clinical trials, as are reasonably necessary to support
initiation of a Pivotal Trial (the “Pre-Pivotal Development”) for such
Collaboration Product in the Field with respect to Japan, all in accordance, in
all material respects, with the Japanese Development Plan therefor (including
the applicable timelines for specific activities).  The Japanese Lead Party for
such Collaboration Product shall update the Japanese Development Plan therefor
at least annually on or before each October 31st.  The Japanese Lead Party shall
keep the other Party through the Coordination Committee reasonably informed as
to the progress of the Pre-Pivotal Development.
 
5.1.3 Pre-Pivotal Japan Report
 
  Upon completion of the Pre-Pivotal Development, the Japanese Lead Party shall
provide the other Party a report including the Data from such Development and
designating whether it elects to proceed with Pivotal Trials for such
Collaboration Product in the Field with respect to Japan (the “Pre-Pivotal Japan
Report”).  If NovaBay is the Japanese Lead Party, such Pre-Pivotal Japan Report
shall also include a summary of the reasonable and documented costs incurred by
or under authority of NovaBay in completing such Pre-Pivotal Development (the
“Pre-Pivotal Development Costs”).  Within sixty (60) days of receipt of the
Pre-Pivotal Japan Report for a Collaboration Product, the other Party shall
notify the Japanese Lead Party as to whether the other Party (itself or through
its designee) intends to be jointly responsible and fund [***] percent ([***]%)
of the Pivotal Trials (if the Japanese Lead Party elects to proceed with Pivotal
Trials for such Collaboration Product) or to take full responsibility and fund
[***] percent ([***]%) of the Pivotal Trials (if the Japanese Lead Party elects
not to proceed with Pivotal Trials for such Collaboration Product), in each case
for such Collaboration Product in the Field with respect to Japan (each, a
“Japanese Election Notice”).  If Galderma is not the Japanese Lead Party and it
so elects to participate in the Pivotal Trials, it shall together with such
Japanese Election Notice, pay NovaBay an amount equal to [***] percent ([***]%)
of the Pre-Pivotal Development Costs.
 
***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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5.1.4 Pivotal Trials
 
  In the case where both Parties elect to fund and be responsible for the
Pivotal Trials for a Collaboration Product in the Field with respect to Japan,
then the Parties shall cooperate in good faith in consultation with each other,
with Galderma (i) acting as the Japanese Lead Party, and (ii) taking the lead
(and having the final say with respect thereto) in preparing a Development Plan
for the conduct of such Pivotal Trials for submission to the Coordination
Committee for review and approval in accordance with Section 3.6 and the Parties
each funding fifty percent (50%) thereof.  If only one Party elects to fund and
be responsible for the Pivotal Trials for a Collaboration Product in the Field
with respect to Japan, then such Party shall prepare a Development Plan for the
conduct of such Pivotal Trials, at its expense, for submission to the
Coordination Committee for approval in accordance with Section 3.6 (with such
Party having the final say).
 
5.2 Commercialization in Japan
 
 
5.2.1 Both Parties Fund
 
  If both Parties fund the conduct of the Pivotal Trials for a Collaboration
Product, then Galderma shall have the co-exclusive right to Commercialize (i.e.,
co-market) such Collaboration Product (itself or through a Marketing Partner,
subject to Section 4.3) under its or its Marketing Partners’ trademarks and,
subject to this Section 5.2.1, NovaBay shall have a co-exclusive right to
co-market such Collaboration Product for use in the Field in Japan, itself or
through one or more Japanese Partners under its or its Japanese Partners’
trademarks.
 
(a) Without limiting Section 4.2, if both Parties fund the conduct of the
Pivotal Trials for a Collaboration Product, then at least eighteen (18) months
in advance of NovaBay or its Japanese Partner’s launch of each such
Collaboration Product for use in the Field in Japan, NovaBay shall propose the
initial Commercialization Plan for NovaBay’s or its Japanese Partner’s
Commercialization of such Collaboration Product in the Field in Japan, which
shall be updated at least annually.  NovaBay shall provide each such
Commercialization Plan and any material modification or addition thereto to
Galderma for its review and comment.  The Parties acknowledge that the comments
from Galderma with respect to any such Commercialization Plan are solely
advisory in nature and that NovaBay shall have the final say relative to such
Commercialization Plan; nonetheless, NovaBay shall consider in good faith the
comments of Galderma with respect thereto.  Without limiting the foregoing,
NovaBay shall provide Galderma together with the reports to be provided under
Section 8.8 an update of its activities with respect to NovaBay or its Japanese
Partner’s Commercialization of such Collaboration Products for use in the Field
in Japan.  Upon Galderma’s reasonable request, NovaBay agrees to make available
appropriate employees and personnel to meet and discuss any questions or
comments of Galderma with respect to NovaBay’s Commercialization of
Collaboration Products for use in the Field in Japan.
 
***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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(b) NovaBay shall, unless otherwise agreed by the Parties, only have the right
to appoint a Japanese Partner pursuant to this Section 5.2 if each of the
following conditions is satisfied:
 
(i) Any such appointment of a Japanese Partner shall be pursuant to a written
agreement that is consistent with the terms hereof, and NovaBay shall be
responsible for the compliance of such Japanese Partner with the applicable
terms of such agreement and of this Agreement;
 
(ii) Each Japanese Partner will have the right to Commercialize Collaboration
Products under its own and NovaBay Product Marks but not Galderma Product Marks
in Japan;
 
(iii) NovaBay’s agreement with each such Japanese Partner will ensure
consistency and coordination of the Japanese Partner’s marketing efforts and
messages with respect to Collaboration Products in Japan with that of Galderma
(or its allowed designee) in Japan; and
 
(iv) The Japanese Partner shall be subject to approval by Galderma, with such
approval not to be unreasonably conditioned or delayed and may only be withheld
if Galderma reasonably believes that NovaBay’s appointment of such Third Party
is likely to put Galderma at a material commercial disadvantage and provides
NovaBay with reasonable written explanation of the basis for such belief within
ten (10) business days of NovaBay notifying Galderma that it is contemplating
such Third Party as a Japanese Partner under this Section 5.2.
 
(c) Without limiting the provisions of Section 6.2, each such Japanese Partner
shall have the right to use or cross-reference Galderma’s Regulatory Filings for
such Collaboration Products with respect to Japan;
 
(d) If the Parties co-market a Collaboration Product in Japan, Galderma shall
supply to NovaBay’s and its Japanese Partner’s requirements of formulated and
packaged (labeled or unlabeled, at Galderma’s discretion) Collaboration Product
in accordance with Section 6.1.3.
 
***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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5.2.2 One Party Funds
 
  If one Party funds the conduct of the Pivotal Trials for a Collaboration
Product, then such Party shall have the exclusive right to Commercialize such
Collaboration Product (itself or through a Marketing Partner or Japanese
Partner, as applicable).  Such Party shall be responsible for preparing and
updating Development Plans for such Collaboration Product for review and
approval by the Coordination Committee (with such Party having final say)
consistent with Section 3.6 and preparing the Commercialization Plan for such
Collaboration Product and providing to the other Party for its review and
comment consistent with Section 4.2 (the terms of which shall apply mutatis
mutandis to a Commercialization Plan prepared by NovaBay).
 
5.2.3 Royalties to Galderma on Japan Sales
 
  If NovaBay (itself or through a Japanese Partner) Commercializes Collaboration
Products in Japan, it shall pay the applicable percentage of Net Sales thereof
by NovaBay or its Japanese Partner as set forth in the table below:

Percentage of Net Sales of Collaboration Products in Japan by NovaBay or its
Japan Partners
If Galderma was the Japanese Lead Party for such Collaboration Product
If Galderma was not the Japanese Lead Party for
such Collaboration Product
If Galderma funds [***]% of the Pivotal Trials for such Collaboration Product
 
 
[***]%
 
[***]%
If Galderma does not fund [***]% of the Pivotal Trials for such Collaboration
Product
 
[***]%
 
[***]%

 
ARTICLE VI
 

 
MANUFACTURING AND SUPPLY, REGULATORY & OTHER MATTERS
 
6.1 Manufacturing and Supply
 
 
6.1.1 Collaboration Compounds
 
  Unless otherwise agreed by the Parties, NovaBay shall have the right and
responsibility (itself or through one or more Third Parties) for manufacturing
and supplying Collaboration Compounds in bulk active pharmaceutical ingredient
form to Galderma for use in all Development and Commercialization activities for
each Collaboration Product in the Field hereunder.  In addition to the transfer
price for Collaboration Compounds so supplied by NovaBay, Galderma shall
reimburse NovaBay for fifty percent (50%) of the reasonable and documented costs
incurred in accordance with a budget proposed by NovaBay and approved by
Galderma (which approval shall not be unreasonably withheld, delayed or
conditioned) with respect to process development, scale-up, quality assurance
and quality control testing and monitoring, stability studies, qualification,
validation and other similar activities with respect to the manufacture of each
Collaboration Compound (collectively “Scale-up Costs”).  Notwithstanding the
foregoing, Galderma shall only reimburse NovaBay for thirty-three (33%) of
Scale-up Costs associated with NVC-[***].  Galderma shall have the right to
verify, at its expense, all Scale-up Costs by audit using an independent
certified public accountant (subject to obligations of confidentiality to
NovaBay or its subcontractor) appointed by Galderma and reasonably acceptable to
NovaBay; provided that in the event such Scale-up Costs are audited and the
audit reveals that such costs were overstated by more than five percent (5%),
then the audit expenses shall be paid by NovaBay.  Without limiting the
foregoing, in the event that such an audit shows any error in the Scale-up
Costs, the payment with respect thereto shall be appropriately adjusted.
 
***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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6.1.2 Collaboration Products
 
  In all events, Galderma shall have a right and the responsibility to
Manufacture (itself or through one or more Third Parties) any Collaboration
Product (i.e., formulate or compound the Collaboration Compound and otherwise
produce the final dosage forms thereof) for use in the Development and
Commercialization activities in the Field under this Agreement.
 
6.1.3 Supply by Galderma
 
  Galderma shall be responsible for Manufacturing or having Manufactured
Collaboration Products for the Development and Commercialization thereof in the
Field for the Galderma Territory.  Upon NovaBay’s written request, Galderma
shall Manufacture and supply Collaboration Products to NovaBay for its (and its
Japanese Partner’s) use and sale as set forth in this Agreement, including for
applications outside of the Field and outside of the Galderma Territory;
provided that (i) Galderma shall have no obligation to Manufacture or supply any
formulation not then being Manufactured by Galderma for its or its Marketing
Partners’ use or sale hereunder and (ii) the Manufacture of the Collaboration
Products for NovaBay shall not materially and adversely affect Galderma’s
Commercialization of Collaboration Products under this Agreement.
 
6.1.4 Transfer Price
 
 
(a) The transfer price of Collaboration Compounds supplied by NovaBay pursuant
to Section 6.1.1 will be equal to NovaBay’s Manufacturing Costs therefor plus
[***].
 
(b) The transfer price of Collaboration Products supplied by Galderma to NovaBay
pursuant to Section 6.1.3 will be equal to Galderma’s Manufacturing Cost
therefor plus [***], provided that such [***] markup shall not apply to the
[***] markup for Collaboration Compounds paid pursuant to Section 6.1.4(a).
 
For purposes of this Agreement, “Manufacturing Cost” has the meaning as set
forth in Exhibit 6.1.4.
 
(c) Each Party agrees that in connection with its manufacture and supply of
Collaboration Compounds or Collaboration Products, as applicable, it will use
commercially reasonable efforts to implement applicable cost-reducing measures
and cooperate with the other Party in doing so.
 
***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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6.1.5 Supply Agreement
 
  Upon request by either Party, the Parties shall use good faith efforts to
promptly negotiate and execute a definitive supply agreement setting forth the
specific terms and conditions of any supply arrangement between the Parties
pursuant to this Section 6.1 (each, a “Supply Agreement”).  Each Supply
Agreement shall (i) contain reasonable and customary supply terms (e.g.,
specifications, forecasts, lead times, purchase obligations and the like),
(ii) be consistent with the terms hereof, and (iii) include the other applicable
terms and conditions set forth in Exhibit 6.1.5.
 
6.1.6 Coordination
 
  Each Party agrees to reasonably cooperate with the other with regard to the
manufacture and supply of Collaboration Compounds and the Manufacture of
Collaboration Products hereunder so as to minimize costs associated therewith,
including when approaching Third Parties regarding potentially acting as a
contract manufacturer for one or more Collaboration Compounds or Collaboration
Products.  Upon either Party’s reasonable request, the Parties shall discuss and
cooperate in good faith to provide for alternate or additional Third Party
contract manufacturers to support the fulfillment of its supply obligations
hereunder.
 
6.2 Regulatory Matters
 
 
6.2.1 Filings
 
    (a) As between the Parties, Galderma shall take the lead and be responsible
for, at its expense, filing, obtaining and maintaining approvals for
Development, Manufacturing and Commercialization of Collaboration Products in
the Field for the Galderma Territory, including any IND, MAA or Marketing
Approval therefor; provided that NovaBay shall be responsible for filing,
obtaining and maintaining permits and approvals with respect to its supply of
Collaboration Compounds in active pharmaceutical ingredient form pursuant to
Section 6.1.1, and Galderma shall be responsible for filing, obtaining and
maintaining permits and approvals with respect to its Manufacture and supply of
Collaboration Products pursuant to Section 6.1.2 and
Section 6.1.3.  Notwithstanding the foregoing, the Japanese Lead Party with
respect to a Collaboration Product shall be responsible for filing and obtaining
the IND, MAA and Marketing Approval for such Collaboration Product in
Japan.  Each Party shall provide the other Party with copies of all material
correspondence with any Regulatory Authority related to the Collaboration
Products, including any Regulatory Filings in support of the foregoing.  Each
Party shall afford representatives of the other Party a reasonable opportunity
but no event less than five (5) business days to comment on Regulatory Filings
and other material correspondence for such Collaboration Product in the Field,
and shall reasonably consider such comments.
 
(b) To the extent not prohibited by applicable Law, each Party shall own all
Regulatory Filings filed by or under authority of such Party for Collaboration
Products in the Field made in accordance with this Agreement.  Each Party shall
promptly provide the other Party with reasonable advance notice (to the extent
practicable) of meetings with any Regulatory Authority that pertain to
Collaboration Products in the Field and to the extent feasible allow the other
Party to attend any such meetings.
 
***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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6.2.2 Clinical Safety Reporting; Pharmacovigilance
 
  With respect to any Adverse Drug Reaction, IND safety report or similar
obligation to report to any Regulatory Authority relating to any safety issue
with respect to Collaboration Products in the Field, Galderma shall be
responsible for and shall establish operating procedures to report to the
appropriate Regulatory Authority(ies) in the Galderma Territory and NovaBay
shall be responsible for and shall establish operating procedures to report to
the appropriate Regulatory Authority(ies) in the NovaBay Territory, in each case
all in accordance with applicable Law and in close coordination with the other
Party.  Such operating procedures shall include any measures necessary for each
Party to fully comply with such Laws and establish Galderma as responsible for
establishing and maintaining the world-wide database for reporting for
Collaboration Products in the Field.  Such operating procedures and any material
revisions to them shall be provided to the Coordination Committee for review and
comment.  The Parties agree to implement prior to the initiation of the first
clinical trial for a Collaboration Product in the Field, a separate agreement
setting forth the responsibilities and procedures for clinical safety
information exchange and reporting.  In addition, the Parties agree to implement
prior to the first commercial sale of a Collaboration Product in the Field in
the Galderma Territory or NovaBay Territory, a separate agreement setting forth
the pharmacovigilance responsibilities and procedures for safety information
exchange and reporting.  Such agreements shall include provisions requiring each
Party promptly communicate to the other Party any correspondence related to the
safety of Collaboration Products in the Field to or from any Regulatory
Authority.  Such agreements shall also include coordination of reporting and
correspondence related to safety matters with respect to products incorporating
Multiple-Field Compounds for applications outside of the Field.  Without
limiting the foregoing, the strategy and content of all responses to any
questions from any such Regulatory Authority related to such matters received by
either Party shall be subject to review and comment by the Coordination
Committee (to the extent practical given the time-frames involved).
 
6.2.3 Cooperation
 
 Each Party agrees to make its personnel reasonably available, upon reasonable
notice to the other Party, at their respective places of employment to consult
with the other Party on issues arising related to the activities conducted in
accordance with this Section 6.2 or otherwise relating to regulatory matters
involving the Collaboration Products in the Field, including any request from
any Regulatory Authority, including regulatory, scientific, technical and
clinical testing issues, or otherwise, throughout the Agreement Term.  Without
limiting the foregoing or Section 6.3, each Party (the “Enabling Party”) agrees
to cooperate with the other Party (the “Filing Party”), at its request, to
comply with specific requests of any Regulatory Authority (such as requests to
inspect clinical trial sites), with respect to Data supplied or to be supplied
by the Enabling Party to the Filing Party for filing with such Regulatory
Authority, or with respect to Collaboration Compounds or Collaboration Products,
respectively, supplied by the Enabling Party.  The Enabling Party shall ensure
that its contractors likewise comply with this Section 6.2.3.  In this regard,
the Enabling Party agrees to provide to applicable Regulatory Authorities, or
provide reference rights to the Filing Party, manufacturing data (including such
information as is required for the CMC section of any IND or NDA, or a drug
master file) specifically requested by the Filing Party, which is reasonably
necessary for the Filing Party to file, prosecute, obtain, or maintain
regulatory approvals for the Collaboration Products.
 
***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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6.2.4 Regulatory Inspection/Audit Rights
 
 
(a) Each Party shall permit the other Party, and/or an authorized representative
reasonably acceptable to such permitting Party, to enter the relevant facilities
of it and its Affiliates once per calendar year (provided that, if any issue is
discovered during an inspection pursuant to the terms of this Section 6.2.4, an
additional inspection may be made pursuant to the terms of this Section 6.2.4 to
confirm resolution of such issue) during normal business hours and upon
reasonable advance notice to inspect and verify compliance with applicable
regulatory and other requirements as well as with this Agreement.  Such
inspection right shall include the right to examine any internal procedures or
records of such Party primarily relating to the Collaboration Compound or
Collaboration Product, as applicable.  Each Party shall give the other Party or
its authorized representative all necessary and reasonable assistance for a full
and correct carrying out of the inspection.  Such inspection shall not relieve
either Party of any of its obligations under this Agreement.
 
(b) Each Party shall use commercially reasonable efforts to secure for the other
Party the rights set forth in Section 6.2.4(a) from such Party’s sublicensees,
trial sites and other subcontractors for the Collaboration Compound and
Collaboration Product, as applicable.  In the event either Party is unable to
secure such inspection rights from any of its sublicensees, trial sites or
subcontractors, such Party agrees to use commercially reasonable efforts to
secure such rights for itself and, if requested by the other Party, shall
exercise such rights, at its own expense, on behalf of the other Party and fully
report the results thereof to such other Party.
 
6.3 Transfer of Data and Regulatory Filings
 
  From time to time, or upon reasonable request of the other Party, each Party
shall transfer to the other Party all previously undisclosed Data and Regulatory
Filings relating to the Collaboration Products that are Controlled by it,
provided that NovaBay and Galderma shall have the right to redact any
proprietary information that is not NovaBay Technology or Galderma Technology,
respectively, therefrom.  Without limiting the foregoing, each Party shall have
the right to (and authorize permitted Third Parties to) access, use and
reference the other Party’s Data and reference the other Party’s Regulatory
Filings and right to file such items with Regulatory Authorities for
Collaboration Compounds or Collaboration Products for purposes of performing
activities in accordance with this Agreement, and with respect to NovaBay, for
purposes of NovaBay performing activities outside the Field with respect to the
Galderma Territory and all purposes with respect to the NovaBay Territory.  For
the avoidance of doubt, Galderma shall have the right to reference Regulatory
Filings Controlled by NovaBay that are related to Collaboration Compounds for
purposes of this Agreement; and similarly, NovaBay shall have the right to
reference Regulatory Filings Controlled by Galderma that are related to
Collaboration Compounds for purposes of this Agreement.  Each Party shall
provide the other with such assistance as the other Party reasonably requests
from time to time, at such other Party’s cost, to enable such other Party to
fully understand and implement the Data and Regulatory Filings transferred under
this Section 6.3.  Notwithstanding anything herein to the contrary, (i) in all
agreements with Third Parties or Affiliates involving creation or use of Data,
NovaBay and Galderma, respectively, shall require that such Third Parties and
Affiliates provide the other Party access to all such Data hereunder, and
(ii) NovaBay shall not provide access to any Data generated by or on behalf of
Galderma to a Third Party for Developing Collaboration Products for the
Dermatology Field, except for safety and other Data to the extent necessary for
purposes of filings with Regulatory Authorities related to the safety of such
Collaboration Product(s) (e.g., ICH E2F filings) and then solely for such
purpose.  For clarity, the restriction described in clause (ii) of the previous
sentence shall not apply to the Development of Collaboration Products outside of
the Dermatology Field.
 
***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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6.4 [***].
 
6.4.1 [***].
 
 
6.4.2 [***].
 
 
6.4.3 [***].
 
 
ARTICLE VII
 
 
LICENSES
 
7.1 License Grants
 
 
7.1.1 To Galderma
 
  Subject to the terms and conditions of this Agreement, including Section 6.1,
NovaBay hereby grants to Galderma:
 
(a) a non-exclusive, fully-paid, world-wide license under the NovaBay Technology
to carry out those Development activities for which it is responsible hereunder;
 
(b) an exclusive (except as otherwise provided in and subject to Section 4.4 and
Section 5.2) license under the NovaBay Technology to Commercialize Collaboration
Products in the Field in the Galderma Territory during the Continuation Period;
 
(c) a non-exclusive license under the NovaBay Technology to Commercialize
Collaboration Products to aesthetic and corrective dermatologists (including
cosmetic surgeons) in their office settings, but not in Healthcare Institution
settings, for use in their practices, including in connection with post-surgical
treatments; and
 
***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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(d) a non-exclusive, world-wide license under the NovaBay Technology to
Manufacture Collaboration Products.
 
The licenses granted under this Section 7.1.1 shall not include the right to
sublicense (except to a Marketing Partner as provided in Section 4.3 or to an
Affiliate); provided, however, that the use by Galderma of subcontractors shall
not be construed as a sublicense.
 
7.1.2 To NovaBay
 
  Subject to the terms and conditions of this Agreement, Galderma hereby grants
to NovaBay:
 
(a) a non-exclusive, fully-paid license to make, use and otherwise exploit the
Galderma Technology to the extent necessary to (i) conduct the activities
assigned to NovaBay under the Development Program, and (ii) cooperate with
Galderma hereunder (including manufacture and supply of Collaboration Compounds
pursuant to Section 6.1.1).  The license granted under this Section 7.1.2(a)
shall not include the right to sublicense; provided, however, that the use by
NovaBay of subcontractors or delegation of responsibilities to an Affiliate
shall not be construed as a sublicense;
 
(b) a non-exclusive license under the Galderma Technology to Develop and
Commercialize Collaboration Products in the Field in Japan in accordance with
and subject to Article V, including through a Japanese Partner; and
 
(c) a non-exclusive license under the Galderma Technology to make, use, sell,
offer for sale, import and otherwise exploit Aganocide Products (i) outside the
Field anywhere in the world, and (ii) within the Field solely in the NovaBay
Territory.  Notwithstanding the foregoing, NovaBay shall not have the right to
exercise the licenses granted pursuant to this Section 7.1.2(c) with respect to
Galderma Technology in a manner that can reasonably be expected to (A) create a
risk of Multiple-Field/Territory Product Substitution as described in
Section 2.4.2, or (B) otherwise compete with Galderma products in the
Dermatology Field in the Galderma Territory.
 
7.1.3 No Other Active Ingredients
 
  For clarity, it is understood that (i) the licenses granted to Galderma under
Section 7.1.1 shall only apply to Collaboration Products incorporating
Collaboration Compound(s) alone or in combination with one or more active
ingredients (which are not Collaboration Compounds), provided that such license
shall not include any license to such other active ingredients themselves, and
(ii) the licenses granted to NovaBay under Section 7.1.2(c) and Section 12.6.5
shall not include any license to any active ingredients themselves, but shall
include licenses to Aganocide Compounds in combination with one or more active
ingredients (which are not Aganocide Compounds).
 
7.2 No Other Rights
 
  Each Party acknowledges that the rights and licenses granted under this
Article VII and elsewhere in this Agreement are limited to the scope expressly
granted.  Accordingly, except for the rights expressly granted under this
Agreement, no right, title, or interest of any nature whatsoever is granted
whether by implication, estoppel, reliance, or otherwise, by either Party to the
other Party.  All rights with respect to Know-How, Patent or other intellectual
property rights that are not specifically granted herein are reserved to the
owner thereof.
 
***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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7.3 Use of NovaBay Technology
 
  Galderma agrees not to use any NovaBay Technology except as expressly provided
in this Agreement.
 
7.4 Use of Galderma Technology
 
  Similarly, NovaBay agrees not to use any Galderma Technology except as
expressly provided in this Agreement.
 
7.5 Conflicts of Interest
 
  In carrying out its rights and responsibilities under the Collaboration, each
Party agrees to act in the best interests of the Collaboration
Products.  Without limiting the foregoing, if Galderma or its Affiliate or
Marketing Partner sells a Collaboration Product to a Third Party to which it
also provides other products or services, Galderma or such Affiliate or
Marketing Partner (as applicable) shall not price, discount or otherwise offer
(including bundling or rebating) the Collaboration Product in any way that
benefits such other products or services at the expense of such Collaboration
Product or otherwise disadvantage the Collaboration Products.  Similarly, if
NovaBay or its Affiliate or Japanese Partner sells a Collaboration Product to a
Third Party in Japan to which it also provides other products or services,
NovaBay or such Affiliate or Japanese Partner shall not price, discount or
otherwise offer (including bundling or rebating) the Collaboration Product in
any way that benefits such other products or services at the expense of such
Collaboration Product or otherwise disadvantage the Collaboration Products in
Japan.  In all events, Galderma and its Affiliates and Marketing Partners and
NovaBay and its Affiliates and any Japanese Partners shall price and offer
Collaboration Products sold by it hereunder in a manner consistent with standard
practices in the pharmaceutical industry and applicable Law.
 
7.6 Medical Devices
 
 
7.6.1 Exclusivity
 
  Notwithstanding anything herein to the contrary, NovaBay agrees during the
Agreement Term not to develop, market, sell, offer for sale or otherwise
commercialize, directly or through any Affiliate of NovaBay, either alone or
with any Third Party, any medical device comprising or incorporating any
Aganocide Compound, in each case for use in the Field in the Galderma Territory.
 
7.6.2 Discussions
 
  Upon the request of either Party, the Parties agree to discuss in good faith
terms and conditions for the development, marketing, sale, offer for sale or
other commercialization of a medical device comprising or incorporating any
Aganocide Compound for use in the Field in the Galderma Territory; provided that
neither Party shall have any obligation to agree to any such terms or
conditions.
 
***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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ARTICLE VIII
 
PAYMENTS
 
8.1 Certain Fees
 
  Galderma shall pay to NovaBay the following fees:
 
8.1.1 Upfront Fee
 
  On the Effective Date, One Million Dollars ($1,000,000);
 
8.1.2 Monthly Fee
 
  On or before the 25th of each of the six (6) calendar months after the
Effective Date, Two Hundred Thousand Dollars ($200,000) for a total not to
exceed One Million Two Hundred Thousand Dollars ($1,200,000); and
 
8.1.3 Completion of Formulation Feasibility Studies
 
  Within fifteen (15) days of the completion of the Formulation Feasibility
Studies to Galderma’s satisfaction, but no later than nine (9) months after the
Effective Date, Two Million Dollars ($2,000,000).
 
The fees set forth in this Section 8.1 shall be non-refundable, and shall not be
creditable against any other amount due hereunder.
 
8.2 Continuation
 
  If Galderma elects to continue the Collaboration beyond the Initial Period,
Galderma shall pay NovaBay the following:
 
8.2.1 Continuation Fee
 
  A non-refundable, non-creditable “Continuation Fee” in the applicable amount
set forth in the table below based on the timing of such payment:

Timing
Amount of the Continuation Fee
If paid on or before March 31,
2010                                                                                          
$[***]
If paid after March 31, 2010 but on or before July 1, 2010
$[***]
If paid after July 1, 2010 but on or before October 1, 2010
$[***]
If paid after October 1,
2010                                                                                          
$[***]

 
8.2.2 Certain Reimbursements
 
  Upon the later of (i) payment of the Continuation Fee, or (ii) thirty (30)
days of NovaBay providing to Galderma an accounting of reasonable and documented
amounts (including receipts for amounts paid to Third Parties) incurred by
NovaBay in performing activities in accordance with the Impetigo Plan with
respect to the Impetigo POC (the “Impetigo Reimbursement Amount”), (A) an amount
equal to the lesser of the Impetigo Reimbursement Amount and [***] Dollars
($[***]), and (B) an additional amount equal to the reimbursement for any
NovaBay FTEs at the FTE Rate incurred in accordance with the budget approved by
the Coordination Committee therefor prior to the payment of the Continuation
Fee, provided that such NovaBay FTEs have not been funded pursuant to
Section 8.3.1.
 
***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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8.3 Galderma Funding During the Continuation Period
 
    8.3.1 FTE Funding
 
 
(a) Galderma shall fund such number of NovaBay FTEs with respect to the research
and development of Collaboration Products in the Field as Galderma may propose
and the Coordination Committee shall agree from time to time (with neither Party
having the final say with respect thereto, provided that Galderma shall agree to
fund and the Coordination Committee shall agree to an average of [***] NovaBay
FTEs during each of the first [***] years of the Continuation Period,  for a
minimum of [***] NovaBay FTEs during such [***] year period), and the allocation
of such NovaBay FTEs shall be determined by the Coordination Committee; provided
that unless otherwise agreed, (i) [***] of such funding shall be directed to
activities under the Development Program and [***] directed to activities
related to research activities outside of the Development Program, and (ii) the
activities of any NovaBay FTEs funded pursuant to this Section 8.3.1(a) shall be
integrated into the Development Plans.  For clarity, Galderma shall have no
obligation to propose any NovaBay FTEs for any particular period.  Effective
beginning with the calendar year 2010, the FTE Rate shall increase no more than
once annually on January 1 of each year by the percentage increase, if any, in
(A) salaries as reported for the current fiscal year by Radford Surveys™
Quarterly Salary Increase Trend Survey (QSIT)--Biotechnology Edition Base Salary
Increase Analysis for Exempt Employees (Current Fiscal Year Actual (Undiluted)
Overall Increases Combined), or (B) the Consumer Price Index, for All Urban
Consumers for the San Francisco Bay Area, as published by the U.S. Department of
Labor, Bureau of Labor Statistics, in each case whichever increase is higher
since the last such increase under this Section 8.3.1(a) (or in the case of the
first such increase, the Effective Date) and such increase shall be effective on
a going-forward basis for the then current and all subsequent Development Plans
hereunder until further modified under this Section 8.3.1(a).  Notwithstanding
anything herein to the contrary and except for those activities of NovaBay
pursuant to the Impetigo Plan for the Impetigo POC, NovaBay shall not have any
obligation to perform any Development activities under this Agreement or incur
any expenses with respect thereto if such activities are not funded by Galderma
under this Section 8.3.1.  Notwithstanding the foregoing, Galderma may fund
additional NovaBay FTEs as set forth in this Section 8.3.1 upon the mutual
agreement of the Parties; and NovaBay may incur additional FTE costs and other
resources in support of activities with respect to the Field.
 
(b) The payment of FTE funding shall be made in advance on a monthly
basis.  Unless otherwise specified, FTEs budgeted over a particular period will
be deemed budgeted equally over such period.
 
8.3.2 Non-FTE Costs
 
  If any Development Plan (other than the Impetigo Plan for Impetigo POC)
includes, and NovaBay conducts and funds any activity using Third Party
resources or acquires any capital equipment, Galderma shall reimburse NovaBay
for the actual amounts paid by NovaBay for such Third Party activities or
capital equipment (provided such equipment will be transferred to Galderma at
the end of the Agreement Term) subject to production of receipts or other
evidence of payment, all as approved by Galderma in the Development Plans.
 
***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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8.4 Development Milestone Payments
 
  Subject to Section 8.4.1 and Section 8.4.2, Galderma shall pay to NovaBay the
amounts set forth in the following table (each, a “Milestone Payment”) upon the
first achievement of the corresponding milestone event for the applicable
Collaboration Product (each, a “Milestone Event”):

Milestone Event
Acne Product
Impetigo Product
1.      Acceptance of an
IND                                                                                     
[***]
[***]
2.      First successful completion of a Phase II Clinical Trial
[***]
[***]
3.      First initiation of any Phase III Clinical Trial
[***]
[***]
4.      First filing of an MAA in a Major
Market                                                                                     
[***]
[***]
5.      First receipt of a Marketing Approval in a Major Market
[***]
[***]

 
8.4.1 Certain Terms
 
 
 
(a) For purposes of this Section 8.4:
 
(i) “Acceptance” with respect to an IND shall be deemed to occur upon (A) the
issuance, acceptance or notification of the IND by the applicable Regulatory
Authority or (B) expiration of the period when the applicable Regulatory
Authority may reject the IND and no such rejection has occurred, as applicable.
 
(ii) The “initiation” of a clinical trial shall be deemed to occur upon the
first dosing of the first subject in such trial.
 
(iii) The “successful completion” of a Phase II Clinical Trial, with respect to
a Collaboration Product, shall be deemed to occur upon finalization of the final
report for such clinical trial wherein any primary endpoint has been met, but no
later than a decision to proceed with a Phase III Clinical Trial for such
Collaboration Product.
 
(b) It is understood that the Milestone Payments reflected under any column in
the table above shall be payable whether or not Milestone Events have been paid
for such Collaboration Product with respect to another column in such
table.    For clarity, each Milestone Payment reflected in such table shall be
due only once and no further payment shall be due no matter how many additional
times such Milestone Event may be achieved with respect to additional Acne
Products or Impetigo Products.  Accordingly, the maximum amount payable by
Galderma to NovaBay pursuant to this Section 8.4 for Acne Products is
$30,000,000 and for Impetigo Products is $12,750,000.
 
(c) If a subsequent Milestone Event with respect to the applicable Collaboration
Product is achieved before a prior Milestone Event with respect to such
Collaboration Product (“prior” and “subsequent” referring to a lower or higher,
respectively, number corresponding to such milestone in the table above, for
example, Milestone Event 2 is “prior” to Milestone Event 3), then all such prior
Milestone Events with respect to such Collaboration Product shall be deemed
achieved upon achievement of the subsequent Milestone Event with respect to such
Collaboration Product and become payable (if not previously paid) in accordance
with this Section 8.4.
 
***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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8.4.2 Milestone Payment Timing
 
  The payments set forth in this Section 8.4 shall each be due and payable to
NovaBay upon the later of (i) payment of the Continuation Fee, and (ii) thirty
(30) days of the achievement (or deemed achievement) of the corresponding
Milestone Event set forth above.  Galderma agrees to promptly notify NovaBay of
its achievement of each Milestone Event.
 
8.5 Royalty Payments to NovaBay
 
  Galderma shall pay to NovaBay a royalty on Net Sales as follows (sample
calculations of which are attached as Exhibit 8.5):
 
8.5.1 Acne Products
 
  Galderma shall pay to NovaBay the applicable royalty rate on Annual Net Sales
of Acne Products as set forth in the table below:

Annual Net Sales
 
Royalty Rate
 
A.  Portion ≤ $
[***]                                                                                    
[***]
B.  Portion >$ [***] and ≤ $
[***]                                                                                    
[***]
C.  Portion >$ [***] and ≤ $
[***]                                                                                    
[***]
D.  Portion >$
[***]                                                                                    
[***]

 
8.5.2 Anti-Bacterial Products
 
  Galderma shall pay to NovaBay the applicable royalty rate on Annual Net Sales
of Anti-Bacterial Products as set forth in the table below:

Annual Net Sales
 
Royalty Rate
 
A.  Portion ≤ $
[***]                                                                                   
[***]
B.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
C.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
D.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
E.  Portion >$
[***]                                                                                   
[***]

 
8.5.3 Anti-Fungal Products
 
  Galderma shall pay to NovaBay the applicable royalty rate on Annual Net Sales
of Anti-Fungal Products as set forth in the table below:

Annual Net Sales
 
Royalty Rate
 
A.  Portion ≤ $
[***]                                                                                   
[***]
B.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
C.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
D.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
E.  Portion >$
[***]                                                                                   
[***]

 
***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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8.5.4 Anti-Viral Products
 
  Galderma shall pay to NovaBay the applicable royalty rate on Annual Net Sales
of Anti-Viral Products as set forth in the table below:

Annual Net Sales
 
Royalty Rate
 
A.  Portion ≤ $
[***]                                                                                   
[***]
B.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
C.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
D.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
E.  Portion >$
[***]                                                                                   
[***]

 
8.5.5 Other Products
 
  Galderma shall pay to NovaBay the applicable royalty rate on Annual Net Sales
of Other Products as set forth in the table below:

Annual Net Sales
 
Royalty Rate
 
A.  Portion ≤ $
[***]                                                                                   
[***]
B.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
C.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
D.  Portion >$ [***] and ≤ $
[***]                                                                                   
[***]
E.  Portion >$
[***]                                                                                   
[***]

 
8.5.6 Certain Terms
 
  For purposes of the foregoing,
 
(a) “Annual Net Sales” shall mean, with respect to a particular calendar year,
all Net Sales in the Galderma Territory by or on behalf of Galderma, its
Affiliates and Marketing Partners during such calendar year.
 
(b) “Anti-Bacterial Products” shall mean, collectively, all Collaboration
Products (other than any Acne Product) labeled (i) for the prophylaxis or
treatment of any indication a primary cause of which is an infection of one or
more types of bacteria, including all Impetigo Products, or (ii) as
anti-bacterial, bactericidal or bacteriastatic.
 
(c) “Anti-Fungal Products” shall mean, collectively, all Collaboration Products
labeled (i) for the prophylaxis or treatment of any indication a primary cause
of which is an infection of one or more types of fungi, or (ii) as anti-fungal,
fungicidal or fungistatic.
 
(d) “Anti-Viral Products” shall mean, collectively, all Collaboration Products
labeled (i) for the prophylaxis or treatment of any indication a primary cause
of which is an infection of one or more viruses, or (ii) as anti-viral,
virucidal or viralstatic.
 
***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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(e) “Other Products” shall mean, collectively, all Collaboration Products which
are not an Acne Product, an Anti-Bacterial Product, an Anti-Fungal Product or an
Anti-Viral Product.
 
8.5.7 Sales Supported by NovaBay
 
  In the event that NovaBay exercises its right to Co-Promote a Collaboration
Product pursuant to Section 4.4, Galderma shall pay to NovaBay a royalty of
[***] of Net Sales of Collaboration Products sold to Healthcare Institutions in
North America.  For the avoidance of doubt, no additional royalty shall be due
under either Section 8.5.1 through 8.5.5 with respect to Collaboration Products
for which the royalty under this Section 8.5.7 is paid.
 
8.5.8 Certain Royalty Conditions
 
 
(a) Notwithstanding the foregoing, if a Collaboration Product is labeled for
multiple indications or is otherwise subject to multiple royalty rates hereunder
only one royalty shall be due at the applicable highest royalty rate.
 
(b) Notwithstanding anything in this Article VIII to the contrary, all Milestone
Payments made under Section 8.4 with respect to Acne Products and [***] of all
amounts incurred by Galderma in the Development of such Acne Products shall be
creditable against [***] of each royalty payment made to NovaBay on Net Sales of
Acne Products pursuant to tiers B, C and D in the table set forth in
Section 8.5.1 until a maximum of [***] have been so credited.  Similarly, all
Milestone Payments made under Section 8.4 with respect to Impetigo Products and
[***] of all amounts incurred by Galderma with respect to the Development of
Impetigo Products (other than those reimbursed to NovaBay pursuant to
Section 8.2.2) shall be creditable against thirty percent (30%) of each royalty
payment due to NovaBay on Net Sales of Impetigo Products pursuant to tiers B, C,
D and E in the table set forth in Section 8.5.2 until a maximum of [***] have
been so credited.  For Collaboration Products that are not Acne Products or
Impetigo Products, all milestone payments established for such Collaboration
Products in accordance with Section 3.5.4 and [***] of all amounts incurred by
Galderma with respect to the Development of such Collaboration Products (other
than those reimbursed to NovaBay pursuant to Section 8.2.2) shall be creditable
against [***] of each royalty payment due to NovaBay on Net Sales of such
Collaboration Products pursuant to tiers C, D and E in the applicable table set
forth in Sections 8.5.2 through 8.5.5 until the maximum amount established for
such Collaboration Products in accordance with Section 3.5.4 have been so
credited.
 
8.5.9 Term of NovaBay Royalties
 
  NovaBay’s right to receive royalties under this Section 8.5 shall continue on
a Collaboration Product-by-Collaboration Product and country-by-country basis
for so long as Galderma, any of its Affiliate or Marketing Partner is
Commercializing such Collaboration Product in such country; provided that from
and after Generic Competition in a particular country with respect to a
Collaboration Product, the applicable royalty rates for such Collaboration
Product set forth in Sections 8.5.1 through 8.5.5 shall be reduced by [***].
 
***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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(a) If there are Net Sales of Collaboration Products within a particular
category (i.e., Acne Product, Anti-Bacterial Product, Anti-Fungal Product,
Anti-Viral Product or Other Product) that are subject to the applicable full
royalty rate and subject to [***] royalty rate as a result of Generic
Competition, then for purposes of calculating the applicable royalty rate
tier(s) the Annual Net Sales shall be allocated to each tier on a weighted
average basis between Collaboration Products at the full royalty rate and [***]
royalty rate (an example of such allocation is attached as Exhibit 8.5.9).
 
(b) For purposes of this Agreement, “Generic Competition” shall mean, with
respect to a particular Collaboration Product or Royalty-Bearing NovaBay
Product, as applicable, (i) in the United States, the first calendar quarter
during which sales by unit volume of all Generic Products in the United States
are at least [***] of the sales of the applicable Collaboration Product or
Royalty-Bearing NovaBay Product in the United States, (ii) in any Major Market
(other than the United States), the first calendar quarter during which sales by
unit volume of all Generic Products in such Major Market are at least [***] of
the sales of the applicable Collaboration Product or Royalty-Bearing NovaBay
Product in such Major Market, and (iii) in all other countries, first launch of
any Generic Product.  Such percentages shall be determined by reference to
applicable IMS (IMS Health Incorporated, Norwalk, CT) data or such other similar
mutually agreed data.
 
8.6 Royalty Payments to Galderma
 
  NovaBay shall pay Galderma the following royalties:
 
8.6.1 For Collaboration Products in Japan
 
  The applicable percentage of Net Sales of Collaboration Products by NovaBay,
its Affiliates and Japanese Partners in Japan as set forth in Section 5.2.3,
which royalty shall be payable for so long as NovaBay is Commercializing such
Collaboration Product in Japan; provided that from and after Generic Competition
in Japan with respect to a Collaboration Product, the applicable royalty rates
for such Collaboration Product set forth in Section 5.2.3 shall be reduced by
[***]; and
 
8.6.2 Royalty-Bearing NovaBay Products
 
  (i) [***] of Net Sales of each Ex-Territory Product sold by NovaBay, its
Affiliates or sublicensees, (ii) [***] of Net Sales of In-Territory Products
sold by NovaBay, its Affiliates or sublicensees, and (iii) [***] of Net Sales of
Ex-Field Products sold by NovaBay, its Affiliates or sublicensees, which
royalties shall be payable on a Royalty-Bearing NovaBay Product-by-product and
country-by-country basis for so long as NovaBay, any of its Affiliate or
sublicensees is selling such Royalty-Bearing NovaBay Product in such country;
provided that from and after Generic Competition in a particular country with
respect to a Royalty-Bearing NovaBay Product, the applicable royalty rates for
such Royalty-Bearing NovaBay Product set forth in this Sections 8.6.2 shall be
reduced by [***].  Notwithstanding anything herein to the contrary, if any
Generic Product with respect to a Royalty-Bearing NovaBay Product is launched by
Galderma or a licensee of Galderma in a country, then the royalties payable to
Galderma under this Section 8.6.2 with respect to such Royalty-Bearing NovaBay
Product in such country shall expire immediately.  Accordingly, upon any such
expiration, the license under Section 7.1.2(c) with respect to such
Royalty-Bearing NovaBay Product in such country shall become fully-paid and
irrevocable.
 
***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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8.7 Material Adverse Events
 
  If a Material Adverse Event with respect to one or more Collaboration Products
or Royalty-Bearing NovaBay Products developed or commercialized by a Party
occurs after the Effective Date, then upon the request of such Party, the
Parties shall negotiate in good faith an appropriate adjustment, if any, to the
royalties payable by such Party with respect to such Collaboration Product(s) or
Royalty-Bearing NovaBay Product(s).  For purposes of this Section 8.7, “Material
Adverse Event” shall mean a state of facts, event, change or effect that has
had, has, or could reasonably be expected to have a material adverse effect on
the market opportunity for a Collaboration Product or Royalty-Bearing NovaBay
Product or either Party’s ability to commercialize (including Commercialize)
such Collaboration Product or Royalty-Bearing NovaBay Products, whether taken
alone or together with other facts, events, changes or effect, but shall exclude
any such fact, event, change or effect over which the effected Party had
reasonable control; provided that [***] shall not be deemed to be a Material
Adverse Event.
 
8.8 Royalty Reports
 
  Within sixty (60) days of the end of each calendar quarter, Galderma shall
deliver a report to NovaBay specifying on a Collaboration
Product-by-Collaboration Product basis: (i) gross amounts invoiced on sales of
Collaboration Products by Galderma and its Affiliates and Marketing Partners
(and if NovaBay exercises its Co-Promotion right, broken out by gross amounts
invoiced on sale of Collaboration Products to Healthcare Institutions in North
America and all other such gross amounts invoiced), (ii) calculation of Net
Sales (including broken down by Healthcare Institutions in North America and
otherwise, if applicable), and (iii) total royalties payable to NovaBay pursuant
to Section 8.5.  Likewise, within sixty (60) days of the end of each calendar
quarter, NovaBay shall deliver a report to Galderma specifying for Collaboration
Products sold by NovaBay, its Affiliates and Japanese Partners in Japan pursuant
to Section 5.2 and on a Royalty-Bearing NovaBay Product-by-product basis:
(i) gross amounts invoiced on sales of Collaboration Products sold by NovaBay,
its Affiliates and Japanese Partners and Royalty-Bearing NovaBay Products by
NovaBay, its Affiliates and sublicensees, (ii) calculation of Net Sales with
respect thereto, and (iii) total royalties payable to Galderma pursuant to
Section 8.6.  Notwithstanding the foregoing, if the Party receiving the royalty
payment is required by Laws applicable to such Party to report revenue or other
information prior to or within fifteen (15) days of the date the reports to be
provided pursuant to this Section 8.8 are due, then the Party providing the
report shall cooperate in good faith with the other Party to provide such
information to permit the other Party to comply with such Laws on a timely
basis.
 
8.9 Payment Method
 
  All payments due under this Agreement by a Party (the “Payor”) shall be made
by bank wire transfer in immediately available funds to an account designated by
the other Party (the “Payee”).  All payments hereunder shall be made in the
legal currency of the United States of America, and all references to “$” or
“Dollars” shall refer to United States dollars (i.e., the legal currency of the
United States).  Except as otherwise provided herein, all payments due to a
Payee hereunder shall be due and payable within thirty (30) days of an invoice
submitted to Payor, except royalty payments in accordance with reports made
pursuant to Section 8.8 shall be payable within five (5) business days of
invoice therefor.  For clarity and notwithstanding anything herein to the
contrary, in no event shall any expense be accounted for or billed more than
once hereunder.
 
***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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8.10 Taxes
 
  All amounts referenced hereunder are exclusive of any withholding, or similar
taxes and payments hereunder shall be made without deduction for such
taxes.  Accordingly, if any withholding or similar tax is due with respect to
such a payment, such tax shall be payable by Payor to the applicable taxing
authority in addition to the amounts set out under this Agreement and Payor
shall furnish to Payee appropriate evidence of payment of any tax or other
amount required by applicable Law to be deducted from any royalty payment,
including any tax or withholding levied by a foreign taxing authority in respect
of the payment or accrual of any royalty.  Notwithstanding the foregoing, to the
extent the Payee obtains a tax credit as a result of the payment of such
withholding or similar tax, Payee shall reimburse Payor the value of such tax
credit.
 
8.11 Records
 
  Each Party shall keep, and shall cause each other Selling Party acting under
its authority to keep, proper books of records and accounts in which full, true
and correct entries (in conformity with Accounting Standards), which shall be
made for the purpose of determining Net Sales and the amounts payable or owed
under this Agreement, and compliance with the other terms and conditions of this
Agreement.  Such books and records shall be maintained for a period of three (3)
years following the end of the calendar year to which they pertain and kept
reasonably accessible, and shall be made available for inspection, upon thirty
(30) days’ written notice throughout such three (3) year period by an
independent Third Party auditor selected by or under authority of the Payee for
such purposes, in accordance with Section 8.12.  Once an inspection of a given
calendar year is complete and any related issues resolved between the Parties,
such calendar year will be closed for audit and shall not be subject to further
inspection pursuant to Section 8.12.
 
8.12 Inspection of Records
 
  Each Party shall, and shall cause each other Selling Party acting under its
authority to permit, independent certified auditors (subject to customary
obligations of confidentiality to such Party or other Selling Party) appointed
by the other Party and reasonably acceptable to such first Party or other
Selling Party, to visit and inspect, during regular business hours and under the
guidance of officers of the Person being inspected, and to examine the books or
records and accounts of such Party or other Selling Party to the extent relating
to this Agreement and discuss the affairs, finances and accounts of such Party
or other Selling Party to the extent relating to this Agreement.  Such Party or
other Selling Party shall permit the independent certified public accountant to
inspect the books and records described in Section 8.11; provided that such
inspection shall not occur more often than once per calendar year, unless a
material error is discovered in such inspection, in which case the other Party
shall have the right to conduct an additional audit for such period.  Any
inspection conducted under this Section 8.12 shall be at the expense of the
Party conducting such audit, unless such inspection reveals any underpayment of
the amount due hereunder by at least five percent (5%) for the applicable
period, in which case the full out-of-pocket costs of such inspection shall be
borne by the Party or other Selling Party acting under its authority being
inspected.  Any undisputed underpayment shall be paid by Payor to Payee within
fifteen (15) business days with interest on the underpayment at the rate
specified in Section 8.13 from the date such payment was originally due; and any
undisputed overpayment may be credited against future payments hereunder without
interest or if there will be no future payments by Payor, then reimbursed within
fifteen (15) business days.
 
***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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8.13 Late Payment
 
  Any payments or portions thereof due hereunder which are not paid when due
shall bear interest, to the extent permitted by applicable Law, from the date
due until paid at a rate equal to the thirty (30) day London Inter-Bank Offering
Rate (LIBOR) for U.S. Dollars, as quoted in The Wall Street Journal (Internet
edition at www.wsj.com) effective for the date on which the payment was due,
plus an additional two percent (2%).  This Section 8.13 shall in no way limit
any other remedies available to either Party.
 
8.14 Currency Conversion
 
  In those cases where the amount due in United States Dollars is calculated
based upon one or more currencies other than United States Dollars, such amounts
shall be converted to United States Dollars using methods that are in compliance
with Accounting Standards and consistent with the financial statements of the
Payor.
 
ARTICLE IX
 

 
INTELLECTUAL PROPERTY
 
9.1 Ownership of Inventions
 
 
9.1.1 General
 
  As between the Parties and subject to the terms and conditions of this
Agreement, all right, title and interest to all inventions and other subject
matter conceived, created or first reduced to practice (together with all
intellectual property rights arising therefrom) in the course of performing the
Collaboration hereunder (each, a “New Invention”) (i) solely by the personnel of
Galderma, its Affiliates and Third Parties acting on their behalf shall be owned
solely by Galderma, (ii) solely by the personnel of NovaBay, its Affiliates and
Third Parties acting on their behalf shall be owned solely by NovaBay, and
(iii) jointly by personnel of Galderma and NovaBay or their Affiliates or Third
Parties acting on their behalf shall be jointly owned by Galderma and
NovaBay.  For purposes of this Agreement, subject matter shall be deemed to be
(a) solely conceived, created or first reduced to practice by or on behalf of a
Party if such subject matter were patentable then no personnel from the other
Party, its Affiliate or Third Parties acting on their behalf would have to be
named on a Patent claiming such subject matter in order for such Patent to be
valid under U.S. Law, and (b) jointly conceived, created or first reduced to
practice by or on behalf of a Party if such subject matter were patentable then
personnel from both Parties or their Affiliate or Third Parties acting on their
behalf would have to be named on a Patent claiming such subject matter in order
for such Patent to be valid under U.S. Law, in each case regardless as to
whether such subject matter is in fact patentable.  Except as expressly provided
in this Agreement, it is understood that neither Party shall have any obligation
to account to the other Party for profits, or to obtain any approval of the
other Party to license, assign or otherwise exploit any such jointly owned
inventions or intellectual property, by reason of joint ownership thereof, and
each Party hereby waives any right it may have under the Laws of any
jurisdiction to require any such approval or accounting.  Notwithstanding
anything to the contrary in this Agreement, neither Party is obligated to assign
any title or interest in inventions and other subject matter (together with all
intellectual property rights therein) conceived or created or first reduced to
practice before the Effective Date.
 
***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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9.1.2 Compound Improvements
 
  Each Party agrees to promptly disclose to the other Party all Compound
Improvements made by or under authority of such Party and disclosed to
it.  Notwithstanding Section 9.1.1, as between the Parties, all right, title and
interest to all Compound Improvements conceived, created or first reduced to
practice by the personnel of either Party, its Affiliates or Third Parties
acting on its behalf, whether solely or jointly with others, shall be solely
owned by, and are hereby assigned to, NovaBay.  As used herein, “Compound
Improvement” shall mean any New Invention comprising (i) the chemical structure
of any Aganocide Compound, whether alone or chemically bonded with other active
pharmaceutical ingredients, (ii) any method of manufacture of any composition
described in clause (i), or (iii) the method of use or administration of any
composition described in clause (i), wherein such method of use or
administration is outside the Dermatology Field.
 
9.1.3 Agreements with Affiliates and Third Parties
 
  Each Party in its agreements with its Affiliates and Third Parties involving
creation of intellectual property in connection with the Collaboration shall
include provisions implementing the provisions of this Section 9.1 above.
 
9.2 Patent Prosecution
 
 
9.2.1 General
 
  Except to the extent expressly specified to the contrary in this Agreement, as
between the Parties, each Party shall retain the right to control the
Prosecution and Maintenance of all intellectual property rights Controlled by
such Party at such Party’s expense.
 
9.2.2 Projected Patent Filings
 
  Each Party agrees to promptly disclose to the IP Subcommittee all applications
for Patents claiming New Inventions. The IP Subcommittee will validate the
ownership of the subject matter thereof in accordance with Section 9.1.
 
9.2.3 NovaBay Patents
 
  As between the Parties, NovaBay (itself or through one or more designees)
shall have the right, at its expense, to control the Prosecution and Maintenance
of the NovaBay Patents using counsel of its choice.  NovaBay agrees to: (i) keep
Galderma reasonably informed with respect to such activities and give Galderma
at least ten (10) business days to review all filings and correspondence with
any patent office anywhere in the world with respect thereto and consider in
good faith any comments that Galderma may provide with respect thereto, and
(ii) consult in good faith with Galderma regarding such matters, including the
abandonment of any claims thereof Covering the Collaboration Products in the
Field in the Galderma Territory.  If NovaBay determines to abandon any claims of
a NovaBay Patent Covering the Collaboration Products in the Field anywhere in
the Galderma Territory, then NovaBay shall provide Galderma with notice at least
sixty (60) days prior to the date such abandonment would become effective.  In
such event, Galderma shall have the right, at its option, to control the
Prosecution and Maintenance of such claims, at its own expense, in NovaBay’s
name; provided that Galderma may offset the cost of such Prosecution and
Maintenance against any royalties payable to NovaBay hereunder with respect to
Collaboration Products Covered by such claims.
 
***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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9.2.4 Galderma Patents
 
  As between the Parties, Galderma (itself or through one or more designees)
shall have the right, at its expense, to control the Prosecution and Maintenance
of the Galderma Patents using counsel of its choice.  Galderma agrees to:
(i) keep NovaBay reasonably informed with respect to such activities and give
NovaBay at least ten (10) business days to review all filings and correspondence
with any patent office anywhere in the world with respect thereto, and consider
in good faith any comments that NovaBay may provide with respect thereto, and
(ii) consult in good faith with NovaBay regarding such matters, including the
abandonment of any claims thereof.  If Galderma determines to abandon any claims
of any such Patent, then Galderma shall provide NovaBay with notice at least
sixty (60) days prior to the date such abandonment would become effective.  In
such event, NovaBay shall have the right, at its option, to control the
Prosecution and Maintenance of such claims at its own expense in Galderma’s
name; provided that NovaBay may offset the cost of such Prosecution and
Maintenance against any royalties payable to Galderma hereunder with respect to
products Covered by such claims.
 
9.2.5 Joint Patents
 
  With respect to Patents claiming New Inventions jointly owned by the Parties
(each, a “Joint Patent”), the IP Subcommittee shall establish a strategy for the
Prosecution and Maintenance of such Joint Patents based on the degree of each
Party’s contribution to such invention, and each Party agrees to take all
reasonable action to cooperate fully in this regard.  Each Party shall bear one
half (½) of the cost and expenses in connection with such activities as they are
incurred, provided that if either Party provides the other Party with sixty (60)
days’ written notice specifying that it desires no longer to bear such costs and
expenses with respect to a particular Joint Patent, then upon the other Party’s
receipt of such notice, such notifying Party shall not be responsible for any
further costs or expenses under this Section 9.2.5 related to any such Joint
Patent; provided, however, that such notifying Party shall be responsible for
any costs and expenses incurred up to and as of the date the other Party
receives such notice, and all right, title and interest in and to such Joint
Patent (together with any Patents issuing thereon or therefrom) shall be and is
hereby assigned, without further consideration, to the other Party (subject to
the licenses granted under Article VII, as applicable).
 
9.2.6 Prosecution and Maintenance
 
  “Prosecution and Maintenance” shall mean, with respect to a Patent, the
preparing, filing, prosecuting and maintenance of such Patent, as well as
re-examinations, reissues, requests for Patent term extensions and the like with
respect to such Patent, together with the conduct of interferences, the defense
of oppositions and other similar proceedings with respect to the particular
Patent; and “Prosecute and Maintain” shall have the correlative meaning.
 
***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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9.3 Defense of Third Party Infringement Claims
 
  If any Collaboration Product manufactured, used, sold, offered for sale or
imported by Galderma or its Affiliates or Marketing Partners in the Field in the
Galderma Territory becomes the subject of a Third Party’s claim or assertion of
infringement of a Patent relating to the manufacture, use, sale, offer for sale
or importation thereof, the Party first having notice of the claim or assertion
shall promptly notify the other Party, and the Parties shall promptly confer to
consider the claim or assertion and the appropriate course of action.  Unless
the Parties otherwise agree in writing, each Party shall have the right to
defend itself against a suit that names it as a defendant.  Neither Party shall
enter into any settlement of any claim described in this Section 9.3 that
adversely affects the other Party’s rights or interests without such other
Party’s written consent, which consent shall not be unreasonably conditioned,
withheld or delayed.  In any event, the Parties shall reasonably assist one
another and cooperate in any such litigation at the other Party’s request and
expense.
 
9.4 Enforcement
 
  Subject to the provisions of this Section 9.4, in the event that Galderma
reasonably believes that any NovaBay Patent is being infringed by a Third Party
or is subject to a declaratory judgment action arising from such infringement,
in each case with respect to the manufacture, use, sale, offer for sale or
importation in the Galderma Territory of a product incorporating any
Collaboration Compound in the Field (each, an “Infringing Product”), Galderma
shall promptly notify NovaBay.  In such event, NovaBay shall have the initial
right (but not the obligation) to enforce such NovaBay Patents with respect to
such infringement, or to defend any declaratory judgment action with respect
thereto (for purposes of this Section 9.4, an “Enforcement Action”).
 
9.4.1 Initiating Enforcement Actions
 
  In the event that NovaBay fails to initiate an Enforcement Action to enforce
such NovaBay Patent against a commercially significant infringement by a Third
Party in a country in the Galderma Territory, which infringement consists of the
manufacture, use, sale, offer for sale or importation of an Infringing Product
in the Field in such country, within fifteen (15) days of a request by Galderma
to initiate such Enforcement Action with respect to Paragraph IV filings in the
United States under the Drug Price Competition and Patent Term Restoration Act
of 1984 or similar Laws in other jurisdictions and thirty (30) days in other
circumstances, Galderma may initiate an Enforcement Action against such
infringement at its own expense.  In such case, NovaBay shall cooperate with
Galderma in such Enforcement Action at Galderma’s expense.  The Party initiating
or defending any such Enforcement Action shall keep the other Party reasonably
informed of the progress of any such Enforcement Action, and such other Party
shall have the right to participate with counsel of its own choice.
        9.4.2 Recoveries
 
  With respect to Enforcement Actions initiated by NovaBay in a country in the
Galderma Territory, Galderma may pay fifty percent (50%) of the costs and
expenses (including attorneys’ and professional fees) incurred by NovaBay in
such Enforcement Action.  Any recovery received as a result of any Enforcement
Action to enforce Patent rights pursuant to this Section 9.4 shall be used first
to reimburse the Parties for the costs and expenses (including attorneys’ and
professional fees) incurred in connection with such Enforcement Action, and the
remainder of the recovery shall be shared (to the extent the same represents
damages from sales of Infringing Products in the Field in the Galderma
Territory) in proportion to the respective Losses suffered by each Party;
provided, however, that if NovaBay initiates the Enforcement Action and Galderma
does not pay fifty percent (50%) of the costs and expenses incurred by NovaBay
therein, Galderma shall be entitled to only twenty-five percent (25%) of its
proportionate share; and if Galderma initiates the Enforcement Action at its own
expense in accordance with this Section 9.4, any recovery received shall be used
first to reimburse Galderma for the costs and expenses (including attorneys’ and
professional fees) incurred in connection with such Enforcement Action, and
NovaBay shall be entitled to only twenty-five percent (25%) of its proportionate
share.  It is understood that any recovery from an Enforcement Action, whether
brought by NovaBay or Galderma, which represents damages from sales of
Infringing Products outside the Field or outside the Galderma Territory, shall
(after reimbursement of both Parties for their costs and expenses (including
attorneys’ and professional fees) incurred in connection with such Enforcement
Action) inure solely and be paid over to NovaBay.
 
***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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9.5 Third Party Technologies
 
        9.5.1 By NovaBay after the Effective Date
 
  If after the Effective Date, NovaBay acquires or licenses from a Third Party
subject matter within the NovaBay Technology other than Formulation Technology
(“NovaBay Third Party Technology”) that is subject to payment obligations to the
Third Party, then NovaBay shall so notify Galderma and the rights granted to
Galderma hereunder with respect to such NovaBay Third Party Technology shall be
subject to Galderma promptly reimbursing NovaBay for the amounts that become
owing to such Third Party by reason of the grant to or exercise by or under
authority of Galderma of such rights to such NovaBay Third Party Technology and
Galderma shall reimburse NovaBay for a reasonable portion of any upfront fee or
other similar amounts paid to acquire such NovaBay Third Party Technology that
is allocable to the rights granted to Galderma with respect to such NovaBay
Third Party Technology hereunder.  Upon request by Galderma, NovaBay shall
disclose to Galderma a written description of such payment
obligations.  Galderma may exclude NovaBay Third Party Technology from the
NovaBay Technology by providing notice to NovaBay thereof, provided that such
notice is provided prior to the exercise of any rights to such NovaBay Third
Party Technology by or under authority of Galderma; in such event, such NovaBay
Third Party Technology shall be deemed excluded from the NovaBay Technology for
all purposes of this Agreement.
        
        9.5.2 By Galderma after the Effective Date
 
  If after the Effective Date, Galderma or its Affiliates acquires or licenses
from a Third Party any Galderma Technology other than Formulation Technology
(“Galderma Third Party Technology”), then Galderma shall use reasonable efforts
to notify NovaBay and the rights granted to NovaBay hereunder with respect to
such Galderma Third Party Technology shall be subject to NovaBay promptly
reimbursing Galderma for the amounts that become owing to such Third Party by
reason of the grant to or exercise by or under authority of NovaBay of such
rights to such Galderma Third Party Technology and NovaBay shall reimburse
Galderma for a reasonable portion of any upfront fee or other similar amounts
paid to acquire such Galderma Third Party Technology that is allocable to the
rights granted to NovaBay with respect to such Galderma Third Party Technology
hereunder.  Upon request by NovaBay, Galderma shall disclose to NovaBay a
written description of such payment obligations.  NovaBay may exclude Galderma
Third Party Technology from the Galderma Technology by providing notice to
Galderma thereof, provided that such notice is provided prior to the exercise of
any rights to such Galderma Third Party Technology by or under authority of
NovaBay; in such event, such Galderma Third Party Technology shall be deemed
excluded from the Galderma Technology for all purposes of this Agreement.
 
***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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     9.5.3. Other Conditions.  Upon request by either Party, the Parties shall
enter into a separate agreement documenting the license grant under any NovaBay
Third Party Technology or Galderma Third Party Technology, as applicable,
(either, “Third Party Technology”) and the payment and other terms associated
with such Third Party Technology.  The obligations of NovaBay and the rights of
Galderma under this Agreement shall be subject to, and limited by, any
agreements pursuant to which NovaBay acquired or licensed any NovaBay Technology
and if any such agreement requires that a particular provision be incorporated
in a sublicense granted thereunder, such provision shall be deemed incorporated
by reference herein only the extent so required and with respect to the subject
matter of such agreement.  Similarly, the obligations of Galderma and the rights
of NovaBay under this Agreement shall be subject to, and limited by, any
agreements pursuant to which Galderma acquired or licensed any Galderma
Technology and if any such agreement requires that a particular provision be
incorporated in a sublicense granted thereunder, such provision shall be deemed
incorporated by reference herein only the extent so required and with respect to
the subject matter of such agreement.  Notwithstanding anything herein to the
contrary, with respect to the Prosecution and Maintenance, and enforcement, of
NovaBay Patents licensed by NovaBay from a Third Party, to the extent NovaBay
has the right to do so, NovaBay shall cooperate with Galderma to Prosecute and
Maintain and enforce such NovaBay Patents in the same manner as set forth in
Section 9.2 and Section 9.4.  As between NovaBay and Galderma, any recoveries
from enforcement of such NovaBay Patents licensed from a Third Party (including
any amounts that NovaBay receives from the Third Party licensor as a result of
such enforcement) shall be shared in accordance with Section 9.4.2, after
deducting from such recoveries any amounts owed to the Third Party licensor for
such enforcement; provided that any Enforcement Actions initiated by the Third
Party licensor shall be deemed initiated by NovaBay for purposes of
Section 9.4.2, and the costs and expenses incurred by NovaBay in such
Enforcement Action shall include the costs and expenses reimbursed or required
to be reimbursed by NovaBay to the Third Party licensor in such Enforcement
Action.
      
          9.6 Patent Marking
  Galderma shall mark (or caused to be marked) all Collaboration Products
marketed and sold by or under authority of Galderma hereunder with appropriate
NovaBay Patent numbers or indicia at NovaBay’s request to the extent permitted
by Law, in those countries in which such notices impact recoveries of damages or
remedies available with respect to infringements of Patents.  Likewise, NovaBay
shall mark (or caused to be marked) all Royalty-Bearing NovaBay Products
marketed and sold by or under authority of NovaBay hereunder with appropriate
Galderma Patent numbers or indicia at Galderma’s request to the extent permitted
by Law, in those countries in which such notices impact recoveries of damages or
remedies available with respect to infringements of Patents.
      
***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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          9.7 Trademarks
      
              9.7.1 Galderma Product Marks
 
  Without limiting the provisions of Section 2.4.2 and subject to the provisions
of Section 9.7.3, Galderma shall have the sole right to determine the
trademarks, trade dress, style of packaging, labeling and the like with respect
to the Commercialization of Collaboration Products in the Field in the Galderma
Territory (such trademarks used or intended for use by Galderma with the
Collaboration Products, including representations thereof in any language, the
“Galderma Product Marks”).  For clarity, the Galderma Product Marks shall
exclude the “Galderma” trade name or any variation thereof, or any successor
name of Galderma, or the name of any successor or acquiring entity of
Galderma.  Unless otherwise agreed, Galderma shall have the sole right (but not
the obligation) to register and enforce (and retain all recoveries therefrom)
the Galderma Product Marks, at its own expense.
      
          9.7.2 NovaBay Product Marks
 
  Without limiting the provisions of Section 2.4.2, NovaBay shall have the sole
right to determine the trademarks, trade dress, style of packaging, labeling and
the like with respect to the Commercialization of Collaboration Products in the
Field in the NovaBay Territory or outside of the Field (such trademarks used or
intended for use by NovaBay with the Collaboration Products, including
representations thereof in any language, the “NovaBay Product Marks”).  For
clarity, the NovaBay Product Marks shall exclude the “NovaBay” trade name or any
variation thereof, or any successor name of NovaBay, or the name of any
successor or acquiring entity of NovaBay.  Unless otherwise agreed, NovaBay
shall have the sole right (but not the obligation) to register and enforce (and
retain all recoveries therefrom) the NovaBay Product Marks, at its own expense.
          
                9.7.3 NovaBay Logo
      Galderma hereby agrees to the extent allowable under applicable Law to
include on all labels of and package inserts and marketing materials for
Collaboration Product(s) sold by or under authority of Galderma to include
NovaBay’s trade name and logo, collectively, the “NovaBay Logos”), provided that
NovaBay shall pay for any and all reasonable and documented incremental expenses
that Galderma incurs in connection with performing its obligations under this
Section 9.7.3.  It is understood that the size and placement of the NovaBay
Marks shall be consistent with Galderma’s practices with respect thereto, or, if
Galderma is not then including Third Party logos, current pharmaceutical
industry practices for similarly situated Third Party logos.  Unless otherwise
agreed, NovaBay shall have the sole right (but not the obligation) to register
and enforce the NovaBay Logos, at its own expense.  Accordingly, NovaBay hereby
grants to Galderma a non-exclusive, royalty-free license to use the NovaBay
Logos solely in connection with the marketing, promotion and sale of the
Collaboration Product(s) in the Field in the Galderma Territory, and to have any
of the foregoing done on Galderma’s behalf by its Affiliates and Marketing
Partners.  Galderma shall ensure that use of the NovaBay Logos is consistent
with high levels of business professionalism, product standards and Galderma’s
use of its own trademarks.  All ownership and goodwill arising out of the use of
the NovaBay Logos shall vest in and inure solely to the benefit of
NovaBay.  Notwithstanding anything herein to the contrary, upon NovaBay’s
written request, Galderma, its Affiliates and Marketing Partners agree to cease
the use of the NovaBay Logos; provided that (i) Galderma, its Affiliates and
Marketing Partners may continue to use any labels, package inserts and marketing
materials in existence or on order as of the receipt of such notice and (ii) in
such case, Galderma’s obligation to include the NovaBay Logos on labels, package
inserts and marketing materials for Collaboration Product(s) shall
terminate.  In those countries within the Galderma Territory where a trademark
license must be recorded, NovaBay shall, at its expense, provide and record a
separate trademark license for the NovaBay Logos, and Galderma shall cooperate
in the preparation and execution of documents as required to effect such
recordation.
 
***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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9.7.4 Co-Promotion
 
  If NovaBay elects to Co-Promote under Section 4.4, Galderma hereby grants to
NovaBay a non-exclusive, royalty-free license to use the Galderma Product Marks
in connection with the Co-Promotion activities performed in accordance with the
terms of this Agreement.  NovaBay shall ensure that use of the Galderma Product
Marks is consistent with high levels of business professionalism, product
standards and written guidelines provided from time to time by Galderma to
NovaBay.  All ownership and goodwill arising out of the use of the Galderma
Product Marks shall vest in and inure solely to the benefit of Galderma.  In
those countries within North America where a trademark license must be recorded,
Galderma shall, at NovaBay’s expense, provide and record a separate trademark
license for the Galderma Product Marks, and NovaBay shall, at NovaBay’s expense,
cooperate in the preparation and execution of documents as required to effect
such recordation.
 
9.7.5 World-wide Branding Strategies
 
  Upon the request of either Party, the Parties agree to discuss terms and
conditions for Galderma to use the applicable NovaBay Product Marks in
connection with the Commercialization of Collaboration Products in the Galderma
Territory or for NovaBay to use the applicable Galderma Product Marks in
connection with the Commercialization of Collaboration Products in the NovaBay
Territory, in either such case to allow the applicable Party to implement a
world-wide branding strategy; provided that neither Party shall have any
obligation to agree to any such terms or conditions.
 
ARTICLE X
 
 
CONFIDENTIALITY
 
10.1 Confidentiality; Exceptions
 
  Except to the extent expressly authorized by this Agreement or otherwise
agreed by the Parties in writing, the Parties agree that the receiving Party
shall keep confidential and shall not publish or otherwise disclose or use for
any purpose other than as provided for in this Agreement any confidential or
proprietary information or materials furnished to it by the other Party pursuant
to or in anticipation of this Agreement, whether before or after the date hereof
(collectively, “Confidential Information”).  Notwithstanding the foregoing,
Confidential Information shall not include information or materials to the
extent that it can be established by written documentation that such information
or material:
 
***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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(a) was already known to or possessed by the receiving Party, other than under
an obligation of confidentiality (except to the extent such obligation has
expired or an exception is applicable under the relevant agreement pursuant to
which such obligation was established), at the time of disclosure;
 
(b) was generally available to the public or otherwise part of the public domain
at the time of its disclosure to the receiving Party;
 
(c) became generally available to the public or otherwise part of the public
domain after its disclosure and other than through any act or omission of the
receiving Party in breach of this Agreement;
 
(d) was independently developed by the receiving Party as demonstrated by
documented evidence prepared contemporaneously with such independent
development; or
 
(e) was disclosed to the receiving Party, other than under an obligation of
confidentiality, by a Third Party who had no obligation to the disclosing Party
not to disclose such information to others.
 
10.2 Authorized Use and Disclosure
 
  Each Party may use and disclose Confidential Information of the other Party as
follows: (i) under appropriate confidentiality provisions substantially
equivalent to those in this Agreement, in connection with the performance of its
obligations or exercise of rights granted or reserved to such Party in this
Agreement, (ii) to the extent such disclosure is reasonably necessary in filing
for, prosecuting, maintaining or enforcing Patents, copyrights and trademarks
(including applications therefor) in accordance with this Agreement, complying
with the terms of agreements with Third Parties, prosecuting or defending
litigation, complying with applicable governmental regulations, filing for,
conducting pre-clinical studies or clinical trials, obtaining and maintaining
regulatory approvals (including Marketing Approvals), marketing Collaboration
Products, or otherwise required by applicable Law, provided, however, that if a
Party is required by Law to make any such disclosure of the other Party’s
Confidential Information it will, except where impracticable for necessary
disclosures (e.g., in the event of medical emergency), give reasonable advance
notice to the other Party of such disclosure requirement and, except to the
extent inappropriate in the case of patent applications, will use its reasonable
efforts to secure confidential treatment of such Confidential Information
required to be disclosed, (iii) in communication with existing and potential
investors, consultants and advisors (including financial advisors, lawyers and
accountants) on a need to know basis, in each case under appropriate
confidentiality provisions substantially equivalent to those of this Agreement,
(iv) with respect to the Confidential Information of NovaBay, by Galderma to
L’Oréal S.A. and Nestlé S.A. consistent with Galderma’s past practice of
disclosure of proprietary information of Third Parties and provided that
Galderma shall use its reasonable efforts to secure confidential treatment of
such Confidential Information so disclosed, or (v) to the extent mutually agreed
to by the Parties.
 
***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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10.3 Publications
 
  Each Party shall submit to the other Party any proposed publication or public
disclosure containing clinical or scientific results for the Collaboration
Products in the Field at least thirty (30) days in advance of the proposed date
of submission for publication, so as to allow that Party to review such proposed
publication or disclosure.  The reviewing Party will promptly review such
proposed publication or disclosure and make any objections or comments that it
may have thereto, and the Parties shall discuss the advantages and disadvantages
of publishing or disclosing such results.  Any proposed publication or public
disclosure of Galderma Technology must be approved in advance by Galderma in
writing; and likewise, any proposed publication or public disclosure of NovaBay
Technology must be approved in advance by NovaBay in writing.  If the Parties
are unable to agree on whether to publish or disclose the same, subject to
Section 10.4, the matter shall be referred to the Coordination Committee for
resolution.  This Section 10.3 shall not be deemed to limit the Parties’
obligations under Section 10.1.
 
10.4 Publicity
 
 
10.4.1 Confidential Terms
 
  Each of the Parties agrees not to disclose to any Third Party the terms and
conditions of this Agreement without the prior approval of the other Party,
except to advisors (including financial advisors, attorneys and accountants),
potential and existing investors, and others (including in the case of NovaBay,
potential and actual licensees under the NovaBay Technology and Galderma,
potential and actual licensees under the Galderma Technology) on a need to know
basis, in each case under circumstances that reasonably protect the
confidentiality thereof, or to the extent necessary to comply with the terms of
agreements with Third Parties, or to the extent required by applicable
Law.  Notwithstanding the foregoing, the Parties agree upon a joint press
release to announce the execution of this Agreement, which is attached hereto as
Exhibit 10.4.1; thereafter, NovaBay and Galderma may each disclose to Third
Parties the information contained in such press release without the need for
further approval by the other Party.
 
10.4.2 Publicity Review
 
  The Parties acknowledge the importance of supporting each other’s efforts to
publicly disclose results and significant developments regarding Collaboration
Products in the Field and other activities in connection with this Agreement
beyond what may be strictly required by applicable Law, and each Party may make
such disclosures from time to time with the approval of the other Party, which
approval shall not be unreasonably withheld, conditioned or delayed.  Such
disclosures may include achievement of significant events in the Development
(including regulatory process and occurrence of Milestone Events) or
Commercialization of Collaboration Products in the Field hereunder or receipt of
payments hereunder.  When a Party (the “Requesting Party”) elects to make any
such public disclosure under this Section 10.4.2, it will give the other Party
(the “Cooperating Party”) reasonable notice to review and comment on such
statement, it being understood that if the Cooperating Party does not notify the
Requesting Party in writing within a five (5) business day period or such
shorter period if required by applicable Law of any reasonable objections, as
contemplated in this Section 10.4.2, such disclosure shall be deemed approved,
and in any event the Cooperating Party shall work diligently and reasonably to
agree on the text of any proposed disclosure in an expeditious manner.  The
principles to be observed in such disclosures shall be accuracy, compliance with
applicable Laws and regulatory guidance documents, reasonable sensitivity to
potential negative reactions of applicable Regulatory Authorities (including the
FDA), the potential loss of competitive advantage by publishing confidential
information regarding the status of development efforts or commercialization
plans prematurely, and the need to keep investors and others informed regarding
the Requesting Party’s business.  Accordingly, the Cooperating Party shall not
withhold, condition or delay its approval of a proposed disclosure that complies
with such principles.
 
***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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10.5 Prior Agreements
 
  This Agreement supersedes that certain Non-Disclosure Agreement between the
Parties dated December 7, 2006 with respect to information subject thereto
(including information disclosed pursuant to that certain expired Material
Transfer Agreement between the Parties, dated April 12, 2007).
 
 
ARTICLE XI
 
REPRESENTATIONS, WARRANTIES AND COVENANTS; INDEMNIFICATION
 
11.1 General Representations and Warranties
 
  Each Party represents and warrants to the other Party as of the Effective Date
that:
 
11.1.1 it is duly organized and validly existing under the Laws of its state of
incorporation or registration, and has full corporate or partnership power and
authority to enter into this Agreement and to carry out the provisions hereof;
 
11.1.2 it is duly authorized to execute and deliver this Agreement and to
perform its obligations hereunder, and the individual or individuals executing
this Agreement on its behalf has/have  been duly authorized to do so by all
requisite corporate or partnership action;
 
11.1.3 this Agreement is legally binding upon it and enforceable in accordance
with its terms.  The execution, delivery and performance of this Agreement by it
does not conflict with any agreement, instrument or understanding, oral or
written, to which it is a party or by which it may be bound, nor violate any
material Law or regulation of any court, governmental body or administrative or
other agency having jurisdiction over it;
 
11.1.4 it has not granted any right to any Third Party which would conflict with
the rights granted to the other Party hereunder; and
 
***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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11.1.5 it is not aware of any action, suit or inquiry or investigation
instituted by any Person which questions or threatens the validity of this
Agreement.
 
11.2 NovaBay’s Warranties
 
  NovaBay represents and warrants to Galderma as of the Effective Date:
 
11.2.1 NovaBay owns all right, title and interest in and to or has a license
with the right to grant a sublicense to Galderma on the terms hereunder in
respect of all of the intellectual property used by NovaBay in the Development
of Collaboration Compounds prior to the Effective Date which intellectual
property would be necessary for Galderma to carry out the Development,
Manufacture and Commercialization of Collaboration Compounds in accordance with
this Agreement, including U.S. Patent 7,462,361 (previously Patent Application
N° 2005/0065115) and equivalent Patents or patent applications from WO05020896
(the “Existing Patent Rights”);
 
11.2.2 NovaBay has not granted rights to any Third Party under the NovaBay
Technology (including the Existing Patent Rights), or any portion thereof, that
conflict with the rights granted to Galderma hereunder;
 
11.2.3 there are no actual, pending, alleged or, to its knowledge, threatened
actions, suits, claims, re-examinations, oppositions, interferences or
governmental investigations by or against NovaBay or any of its Affiliates or
other licensees of NovaBay or its Affiliates, in each case that (i) involve the
Collaboration Compounds, Existing Patent Rights or intellectual property
otherwise Controlled by NovaBay related to the subject matter of this Agreement,
and (ii) would reasonably be expected to materially adversely affect the ability
of NovaBay to perform its obligations hereunder;
 
11.2.4 to its knowledge, the manufacture, use, sale or importation of the
Collaboration Compounds as of the Effective Date as contemplated by this
Agreement does not infringe or otherwise violate any Third Party intellectual
property;
 
11.2.5 there is no actual, pending, alleged or, to its knowledge, threatened
infringement by a Third Party of any of the Existing Patent Rights or
intellectual property otherwise Controlled by NovaBay related to the subject
matter of this Agreement;
 
11.2.6 to its knowledge, none of the issued NovaBay Patents are invalid or
unenforceable;
 
11.2.7 all employees or contractors of NovaBay or its Affiliates who have
created or developed intellectual property used by NovaBay in the Development of
Collaboration Compounds prior to the Effective Date, including any subject
matter claimed in the Existing Patent Rights have validly and irrevocably
assigned to NovaBay all of their rights therein, including intellectual property
rights;
 
***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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11.2.8 (i) NovaBay has complied with all applicable Laws in connection with its
development of the Collaboration Compounds, and (ii) it and, to its knowledge,
Third Parties performed the related studies and clinical trials, the results of
which are embodied in the NovaBay Know How, in accordance with applicable Law
and good clinical practices;
 
11.2.9 (i) it has paid all required application fees, registration fees,
maintenance fees and the like with regard to the NovaBay Patents owned by
NovaBay, and (ii) it has filed with the relevant intellectual property agency
all required documents and certificates in connection with
application,  registration and maintenance of the NovaBay Patents owned by
NovaBay;
 
11.2.10 neither this Agreement nor the transactions contemplated hereby shall
result in NovaBay granting to any Third Party any right with respect to any
intellectual property licensed to Galderma hereunder in conflict with the rights
and licenses granted to Galderma hereunder;
 
11.2.11 the intellectual property licensed to Galderma hereunder constitutes all
intellectual property Controlled by NovaBay that is necessary in connection with
the use, development, Manufacture, importation, sale, distribution, marketing
and promotion of the Collaboration Products in accordance with this Agreement;
 
11.2.12 (i) none of the Existing Patent Rights has been cancelled, has expired
or has been abandoned, and (ii) NovaBay has taken security measures that are
customary in the biotechnology industry in which NovaBay operates and as NovaBay
deems appropriate to protect the confidentiality of its Confidential Information
that it desires to keep confidential;
 
11.2.13 NovaBay has responded in good faith to all of Galderma’s requests for
materials and information in connection with Galderma’s due diligence efforts
with respect to this Agreement and it has no knowledge of any material omissions
with respect to any response to any such request; and
 
11.2.14 NovaBay has the right to disclose to Galderma pursuant to NovaBay’s
Collaboration and License Agreement, dated August 29, 2006, with Alcon
Manufacturing, Ltd. (the “Alcon Agreement”) the Data (as defined in and
developed under the Alcon Agreement) as contemplated and for the purposes as set
forth in this Agreement.
 
11.3 Covenant
 
  Each Party hereby covenants that it will not grant during the Agreement Term
any right to any Third Party which would conflict with the rights granted to the
other Party hereunder.
 
11.4 Disclaimer of Warranties
 
  EXCEPT AS SET FORTH IN THIS Article XI, NOVABAY AND GALDERMA EXPRESSLY
DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE,
WITH RESPECT TO THE SUBJECT MATTER OF THIS AGREEMENT (INCLUDING THE NOVABAY
TECHNOLOGY AND THE GALDERMA TECHNOLOGY), INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THE
INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES.
 
***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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11.5 Indemnification
 
 
11.5.1 Indemnification by NovaBay.  NovaBay hereby agrees to defend, hold
harmless and indemnify (collectively, “Indemnify”) Galderma and its Affiliates,
and its and their agents, directors, officers and employees (the “Galderma
Indemnitees”) from and against any liability or expense (including reasonable
legal expenses and attorneys’ fees) (collectively “Losses”) resulting from
suits, claims, actions and demands, in each case brought by a Third Party (each,
a “Third-Party Claim”) arising out of: (i) a breach of any of NovaBay’s
representations and warranties under Section 11.1 or Section 11.2, (ii) the acts
or omissions of the NovaBay Indemnitees, (iii) any exploitation of Collaboration
Compounds or Collaboration Products or other exercise of the licenses granted
hereunder by or under authority of NovaBay, including the use, manufacture,
marketing, distribution, importation or sale of any Collaboration Compound by
NovaBay, its Affiliates or their respective licensees, or (iv) the use by any
Galderma Indemnitee of the NovaBay Logo pursuant to Section 9.7.3.  NovaBay’s
obligation to Indemnify the Galderma Indemnitees pursuant to this Section 11.5.1
shall not apply to the extent that any such Losses (A) arise from the negligence
or intentional misconduct of any Galderma Indemnitee, (B) arise from any breach
by Galderma of this Agreement, or (C) are Losses for which Galderma is obligated
to Indemnify the NovaBay Indemnitees pursuant to Section 11.5.2.
 
11.5.2 Indemnification by Galderma
 
  Galderma hereby agrees to Indemnify NovaBay and its Affiliates, and its and
their agents, directors, officers and employees (the “NovaBay Indemnitees”) from
and against any and all Losses resulting from Third-Party Claims arising out of:
(i) a breach of any of Galderma’s representations and warranties under
Section 11.1, (ii) the acts or omissions of the Galderma Indemnitees, or
(iii) the exploitation of Collaboration Compounds or Collaboration Products or
other exercise of the licenses granted hereunder by or under authority of
Galderma, including the use, manufacture, marketing, distribution, importation
or sale of any Collaboration Product by Galderma, its Affiliates or its
Marketing Partners or (iv) the use by any NovaBay Indemnitee of the Galderma
Product Marks pursuant to Section 9.7.4.  Galderma’s obligation to Indemnify the
NovaBay Indemnitees pursuant to this Section 11.5.2 shall not apply to the
extent that any such Losses (A) arise from the negligence or intentional
misconduct of any NovaBay Indemnitee, (B) arise from any breach by NovaBay of
this Agreement, or (C) are Losses for which NovaBay is obligated to Indemnify
the Galderma Indemnitees pursuant to Section 11.5.1.
 
11.5.3 Procedure
 
  To be eligible to be Indemnified hereunder, the indemnified Party shall
provide the indemnifying Party with prompt notice of the Third-Party Claim
giving rise to the indemnification obligation pursuant to this Section 11.5 and
the exclusive ability to defend (with the reasonable cooperation of the
indemnified Party) or settle any such claim; provided, however, that the
indemnifying Party shall not enter into any settlement that admits fault,
wrongdoing or damages without the indemnified Party’s written consent, such
consent not to be unreasonably withheld or delayed. The indemnified Party shall
have the right to participate, at its own expense and with counsel of its
choice, in the defense of any claim or suit that has been assumed by the
indemnifying Party.
 
***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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11.6 Insurance
 
  Each Party shall obtain and maintain, during the term of this Agreement and
for six (6) years thereafter, five million dollars ($5,000,000) combined single
limit for comprehensive general liability insurance, including products
liability insurance and coverage for clinical trials, with reputable and
financially secure insurance carriers or captive insurer in a form and at levels
consistent with industry standards based upon such Party’s activities hereunder
and indemnification obligations hereunder, with the other Party named as an
additional insured.  Such liability insurance or self-insurance through a
captive insurer shall be maintained on an occurrence basis to provide such
protection after expiration or termination of the policy itself or this
Agreement or claims made basis with purchased tail coverage for six (6)
years.  Each Party shall furnish to the other Party on request a certificate of
insurance issued by the insurance company or captive insurer setting forth the
amount of the liability insurance and a provision that the other Party hereto
shall receive thirty (30) days’ written notice prior to termination or material
reduction to the level of coverage.
 
ARTICLE XII
 
TERM AND TERMINATION
 
12.1 Term
 
  This Agreement shall become effective as of the Effective Date and, unless
earlier terminated pursuant to the other provisions of this Article XII, shall
continue in full force and effect until all royalty obligations on behalf of
each Party have expired (the “Agreement Term”).
 
12.2 Termination by Galderma
 
  Galderma shall have the right to terminate this Agreement:
 
12.2.1 Failure of Formulation Feasibility
 
  Any time prior to the nine (9) month anniversary of the Effective Date, upon
thirty (30) days’ written notice to NovaBay referencing this Section 12.2.1, if
Galderma reasonably determines that the Formulation Feasibility Studies have
been unsuccessful, which notice shall include the rational and results from the
Formulation Feasibility Studies upon which such determination was made.  During
such thirty (30) day period, Galderma shall meet with NovaBay, at NovaBay’s
request, to discuss Galderma’s determination and notwithstanding anything to the
contrary, Galderma shall pay NovaBay the amount of [***];
 
12.2.2 Prior to Continuation Period
 
  After the completion of the Acne POC but prior to the payment of the
Continuation Fee upon thirty (30) days’ written notice to NovaBay referencing
this Section 12.2.2, if Galderma reasonably determines that the results of the
Acne POC do not warrant further Development of an Acne Product, which notice
shall include the rational and results from the Acne POC upon which such
determination was made.  During such thirty (30) day period, Galderma shall meet
with NovaBay, at NovaBay’s request, to discuss Galderma’s determination;
 
***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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12.2.3 During the Continuation Period
 
  Any time after the commencement of the Continuation Period upon six (6)
months’ written notice to NovaBay referencing this Section 12.2.3, provided that
during the first month of such six (6)- month period, Galderma shall meet with
NovaBay, at NovaBay’s request, to discuss Galderma’s reasoning for termination;
 
12.2.4 For Safety Reasons
 
.  At any time upon sixty (60) days’ written notice to NovaBay referencing this
Section 12.2.4 on a Collaboration Product-by-Collaboration Product basis, if
Galderma reasonably determines that there are safety issues relating to such
product which are not addressable using Commercially Reasonable Efforts, which
notice shall include the basis and results upon which such determination was
made.  During such sixty (60) day period, Galderma shall meet with NovaBay, at
NovaBay’s request, to discuss Galderma’s determination and notwithstanding
anything to the contrary, Galderma shall pay NovaBay the amount of [***]; and
 
12.2.5 [***].
 
12.3 Termination for Breach
 
12.3.1 General
 
  Either Party may terminate this Agreement in the event the other Party
materially breaches this Agreement, and such breach continues for sixty (60)
days after notice thereof referencing this Section 12.3.1 was provided to the
breaching Party by the non-breaching Party.  Any such termination shall become
effective at the end of such sixty (60) day period unless the breaching Party
has cured any such breach prior to the expiration of the sixty (60) day period.
 
12.3.2 Termination of the Licenses in 7.1.2(c)
 
  Without limiting Galderma’s rights under Section 12.3.1, Galderma may
terminate the licenses granted to NovaBay pursuant to Section 7.1.2(c) in the
event NovaBay fails to pay any undisputed royalty under Section 8.6.2, and such
failure continues for sixty (60) days after notice thereof referencing this
Section 12.3.2 was provided to NovaBay.  Any such termination shall become
effective at the end of such sixty (60) day period unless NovaBay has cured any
such failure prior to the expiration of the sixty (60) day period.
 
12.4 Termination for Failure to Pay the Continuation Fee
 
  If Galderma has not paid the Continuation Fee on or before March 31, 2011,
then NovaBay may terminate this Agreement on notice to Galderma referencing this
Section 12.4.
 
12.5 General Effects of Expiration or Termination
 
12.5.1 Accrued Obligations
 
  Expiration or termination of this Agreement for any reason shall not release
either Party from any obligation or liability which, at the time of such
expiration or termination, has already accrued to the other Party or which is
attributable to a period prior to such expiration or termination.
 
***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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12.5.2 Non-Exclusive Remedy
 
  Notwithstanding anything herein to the contrary, termination by a Party
pursuant to this Article XII shall be without prejudice to other remedies such
Party may have at Law or equity.
 
12.5.3 No Milestone Payment
 
  Upon any termination of this Agreement in its entirety pursuant to the terms
hereof, Galderma shall not be obligated to pay any Milestone Payment with
respect to a Milestone Event that occurs between the notice of termination and
the effective date of such termination notwithstanding any other terms of this
Agreement.  For clarity, the foregoing shall not (i) limit Galderma’s obligation
to pay any Milestone Payment with respect to Milestone Event that occurs prior
to such a notice of termination or (ii) apply to termination of this Agreement
(A) with respect to one or more Collaboration Products pursuant to
Section 12.2.4, (B) with respect to future Development Proposals pursuant to
Section 12.2.5 or (C) pursuant to Section 12.3.2.
 
12.5.4 Return of Materials
 
  Except to the extent it has the right to use such Confidential Information in
accordance with the express terms hereof, within forty-five (45) days after the
effective date of termination of this Agreement in its entirety (or if longer,
end of the Agreement Wind-Down Period), each Party shall destroy all tangible
items comprising, bearing or containing any Confidential Information of the
other Party that are in its or its Affiliates’ possession or control, and
provide written certification of such destruction, or prepare such tangible
items of Confidential Information for shipment to such other Party, as such
other Party may direct, at such other Party’s expense; provided that each Party
may retain one (1) copy of such Confidential Information for its legal
archives.  For clarity, a Party shall have the right to retain and use
Confidential Information of the other Party in connection with rights and
licenses granted or retained in accordance with this Article XII.
 
12.5.5 General Survival
 
  Article I, XII, XIII and XIV and Sections 7.2, 8.8 – 8.14 (in the case of
Sections 8.8 – 8.14, solely with respect to activities prior to the effective
date of the applicable expiration or termination and without limiting the other
provisions of this Article XII and if a specific period is set forth therein
only for such period), 9.1.1, the second sentence of 9.1.2, 9.2.5, 9.2.6, 10.1,
10.2, 10.4.1, 10.5, 11.1, 11.2, 11.4, 11.5, 11.6 (for the period set forth
therein) shall survive expiration or termination of this Agreement for any
reason.  Except as otherwise provided in this Article XII, all rights and
obligations of the Parties under this Agreement shall terminate upon expiration
or termination of this Agreement in its entirety for any reason.
 
12.6 Effects of Certain Terminations
 
  If (i) Galderma terminates this Agreement in its entirety pursuant to
Section 12.2, or (ii) NovaBay terminates this Agreement pursuant to Section 12.3
or Section 12.4, then at NovaBay’s election:
 
12.6.1 Transition Assistance
 
  Each Party agrees, at its own expense, to use commercially reasonable efforts
to cooperate with the other Party to facilitate a smooth, orderly transition of
the Development and Commercialization of Collaboration Products in the Field in
the Galderma Territory to NovaBay or its designee(s) as soon as reasonably
practicable under the circumstances, but in any event within one (1) year of the
effective date of such termination (the “Agreement Wind-Down Period”).  Upon
request by NovaBay, Galderma shall transfer to NovaBay some or all quantities of
Collaboration Products in its or its Affiliates’ possession (as requested by
NovaBay), within thirty (30) days after the end of the Agreement Wind-Down
Period; provided, however, that NovaBay shall reimburse Galderma for the
Manufacturing Costs plus [***] for the quantities so provided to NovaBay.  If
any Collaboration Product was Manufactured by any Third Party for Galderma, or
Galderma had contracts with vendors which contracts are necessary or useful for
NovaBay to take over responsibility for the Collaboration Products in the
Territory, then Galderma shall to the extent possible and requested in writing
by NovaBay, assign all of the relevant Third-Party contracts to NovaBay, and in
any case, Galderma agrees to use Commercially Reasonable Efforts to cooperate
with NovaBay to ensure uninterrupted supply of Collaboration Products.  If
Galderma or its Affiliate Manufactured any Collaboration Product at the time of
termination, then Galderma (or its Affiliate) shall continue to provide for
Manufacturing of such Collaboration Product for NovaBay, at the rate set forth
in Section 6.1.4, from the date of notice of such termination until such time as
NovaBay is able, using commercially reasonable efforts to do so, to secure an
acceptable alternative commercial manufacturing source from which sufficient
quantities of Collaboration Product may be procured and legally sold in the
Galderma Territory, but in no event later than two (2) years from the effective
date of such termination.
 
***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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12.6.2 Ongoing Trials
 
  Provided that the termination of this Agreement is not a termination by
Galderma pursuant to Section 12.2.4, if there are any ongoing clinical trials
with respect to Collaboration Products being conducted by or under authority of
Galderma at the time of notice of termination, Galderma agrees, at NovaBay’s
request, to (i) promptly transition to NovaBay or its designee some or all of
such clinical trials and the activities related to or supporting such trials at
Galderma’s expense, (ii) continue to conduct such clinical trials for a period
requested by NovaBay up to a maximum of six (6) months after the effective date
of such termination, for which NovaBay would reimburse Galderma for its
out-of-pocket expenses incurred with respect thereto, or (iii) terminate such
clinical trials; in each case as requested by NovaBay, but without limiting
Section 12.6.9, in no event shall Galderma be required to continue clinical
trials if it reasonably believes such continuation might adversely affect the
health of patients participating in the clinical trials.
 
12.6.3 Commercialization
 
  Provided that the termination of this Agreement is not a termination by
Galderma pursuant to Section 12.2.4, if requested by NovaBay, Galderma and its
Affiliates and Marketing Partners shall continue to distribute and sell
Collaboration Products in the Field in each country of the Galderma Territory
for which Marketing Approval therefor has been obtained, in accordance with the
terms and conditions of this Agreement, for a period requested by NovaBay not to
exceed two (2) years  from the effective date of such expiration or termination
(for purposes of this Section 12.6.3, the Agreement Wind-Down Period); provided
that NovaBay may terminate the Agreement Wind-Down Period upon sixty (60) days’
notice to Galderma.  Notwithstanding any other provision of this Agreement,
during the Agreement Wind-Down Period, Galderma’s, its Affiliates’ and its
Marketing Partners’ rights with respect to Collaboration Products (including the
licenses granted under Section 7.1.1) shall be non-exclusive and NovaBay shall
have the right to engage one or more other partner(s) or distributor(s) of
Collaboration Products in the Field in all or part of the Galderma
Territory.  Any Collaboration Products sold or disposed by Galderma or its
Affiliates or Marketing Partners during the Agreement Wind-Down Period shall be
subject to the applicable royalties under Section 8.5.  After the Agreement
Wind-Down Period, Galderma and its Affiliates and Marketing Partners shall not
make any representation regarding their status as a licensee of or distributor
for NovaBay for any Collaboration Product.  In addition, Galderma shall promptly
provide NovaBay copies of customer lists and other customer information relating
to Collaboration Products reasonably necessary in Galderma’s reasonable opinion
for NovaBay to continue to Commercialize such Collaboration Products, which
NovaBay shall have the right to use and disclose for any purpose during the
Agreement Wind-Down Period and thereafter.
 
***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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12.6.4 Regulatory Filings/Data
 
  Galderma shall, at NovaBay’s expense, promptly assign and transfer to NovaBay
all Regulatory Filings for Collaboration Products that are held or controlled by
or under authority of Galderma or its Affiliates or Marketing Partners, and
shall take such actions and execute such other instruments, assignments and
documents as may be necessary to effect the transfer of rights under the
Regulatory Filings to NovaBay.  Upon such termination, Galderma shall cause each
of its Affiliates and Marketing Partners to transfer any such Regulatory Filings
to NovaBay at NovaBay’s expense.  If applicable Law prevents or delays the
transfer of ownership of any Regulatory Filing to NovaBay, Galderma shall grant
to NovaBay a permanent, exclusive and irrevocable right of access and reference
to such Regulatory Filing for Collaboration Products, and shall cooperate fully
to make the benefits of such Regulatory Filings available to NovaBay or its
designee(s).  Within sixty (60) days after notice of such termination, Galderma
shall provide to NovaBay copies of all such Regulatory Filings, and of all Data
relating to the Collaboration Products.  NovaBay shall be free to use and
disclose such Regulatory Filings and Data in connection with the exercise of its
rights hereunder with respect to Collaboration Products and Aganocide Products,
including exercise of the licenses under Section 12.6.5.
 
12.6.5 Technology Licenses
 
(a) Galderma hereby grants NovaBay effective upon the notice of termination of
the Agreement in its entirety under Section 12.2, or the effective date of such
termination by NovaBay under Section 12.3, a non-exclusive, worldwide,
perpetual, license, under the Galderma Technology to Develop and Commercialize
In-Process Collaboration Products and Proposed Collaboration Products in the
Field in the Galderma Territory.
 
(b) For purposes of this Agreement, “In-Process Collaboration Products” shall
mean any and all Collaboration Products for which a Development Plan has been
approved by the Coordination Committee prior to the notice of termination,
together with all (A) alternative dosage forms, (B) label expansions and
(C) line extensions (related formulations of the same Collaboration
Compound(s)); and “Proposed Collaboration Products” shall mean any and all
Collaboration Products for a Proposed Indication for which a Development
Proposal has been submitted by NovaBay pursuant to Section 3.5 but has not
become an Accepted Indication.
 
***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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(c) In consideration of the licenses granted pursuant to this Section 12.6.5(a),
NovaBay shall pay Galderma a royalty equal to: (i) with respect to Impetigo
Products, [***], and with respect to other In-Process Collaboration Products,
[***] of the applicable Net Sales in the Field in the Galderma Territory by or
under authority of NovaBay, in either case for which a Phase II Clinical Trial
was successfully completed for the Galderma Territory by or under authority
Galderma during the Agreement Term (but no Phase III Clinical Trial was
successfully completed), (ii) with respect to Impetigo Products, [***], and with
respect to other In-Process Collaboration Products, [***] of the applicable Net
Sales in the Field in the Galderma Territory by or under authority of NovaBay,
in either case for which a Phase III Clinical Trial was successfully completed
for the Galderma Territory by or under authority Galderma during the Agreement
Term (but no commercial sales were initiated), (iii) with respect to Impetigo
Products, [***], and with respect to other In-Process Collaboration Products,
[***] of the applicable Net Sales in the Field in the Galderma Territory by or
under authority of NovaBay, in either case for which commercial sales were
initiated by or under authority of Galderma, and (iv) with respect to Proposed
Collaboration Products and any In-Process Collaboration Products not addressed
by clauses (i) through (iii) above, a royalty rate to be negotiated and
established mutually by the Parties in good faith within sixty (60) days of the
effective date of such license but not to exceed [***], in the case of any
Proposed Collaboration Product or In-Process Collaboration Product Covered by a
Patent, or [***], in the case of any such product not Covered by a Patent, of
the applicable Net Sales in the Field in the Galderma Territory by or under
authority of NovaBay, in each case which royalties shall be payable on a
Collaboration Product-by-Collaboration Product and country-by-country
basis.  For clarity, except as provided in this Section 12.6.5(c), the license
granted to NovaBay in this Section 12.6.5 shall be fully-paid.  The provisions
of Section 8.6.2 starting with the proviso in the first sentence shall apply to
this Section 12.6.5(c) mutatis mutandis.
 
(d) The licenses granted to NovaBay in Section 7.1.2(c) shall survive any such
termination without the limitation set forth in the second sentence of
Section 7.1.2(c).  In consideration of the survival of such license, NovaBay
shall continue to pay to Galderma the royalties set forth in Section 8.6.2, all
on the terms and subject to the provisions of Sections 8.7 through 8.14.
 
(e) In addition to any royalty payable pursuant to Section 12.6.5(c), NovaBay
shall continue to pay all amounts required by and bound by the applicable terms
of (i) the last two sentences of Section 3.7 and (ii) Sections 9.5.2 and 9.5.3.
 
(f) Galderma may terminate the licenses granted to or retained by NovaBay
pursuant to this Section 12.6.5 in the event NovaBay fails to pay any undisputed
royalty under this Section 12.6.5, and such failure continues for sixty (60)
days after notice thereof referencing this Section 12.6.5 was provided to
NovaBay.  Any such termination shall become effective at the end of such sixty
(60) day period unless NovaBay has cured any such failure prior to the
expiration of the sixty (60) day period.
 
***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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12.6.6 Trademarks
 
  Galderma shall, at NovaBay’s expense, assign, and does hereby assign, to
NovaBay all worldwide rights in and to the Galderma Product Marks together with
the associated goodwill.
 
12.6.7 Marketing Partners
 
  Galderma’s Marketing Partners shall, at the request of NovaBay, be assigned to
NovaBay to the extent practicable with respect to Collaboration Products
hereunder.  In the event NovaBay does not request assignment of such Marketing
Partners, then the rights of such Marketing Partners with respect to
Collaboration Products shall terminate upon termination of Galderma’s rights
with respect to Collaboration Products.
 
12.6.8 Governance
 
  Any activities undertaken by NovaBay or a Third Party designee with respect to
the Collaboration Products during the Agreement Wind-Down Period shall not be
subject to the authority of the Coordination Committee or any of the provisions
of Article II or Sections 3.1 – 3.6, 3.7 or 4.6.
 
12.6.9 Suspension of Activities
 
  Notwithstanding anything herein to the contrary, in the event of a termination
of this Agreement by Galderma pursuant to Section 12.2.4, Galderma shall have
the right to suspend all Development and Commercialization activities with
respect to Collaboration Products immediately, subject to any requirements of
applicable Law.
 
12.7 Termination With Respect to Collaboration Products
 
  If Galderma electively terminates this Agreement as a one or more
Collaboration Products pursuant to Section 12.2.4 (each, a “Terminated
Product”), then at NovaBay’s election the terms and condition of Section 12.6
shall apply to such Terminated Product but not other Collaboration Products.
 
12.8 Termination for [***]
 
 If Galderma electively terminates this Agreement as to future Development
Proposals pursuant to Section 12.2.5, then the following shall apply from the
effective date of such termination:
 
12.8.1 Termination of Certain Provisions
 
  Notwithstanding anything herein to the contrary, the provisions of
Sections 2.1, 2.2, 2.3, 2.4.1, 3.1, 3.5, 3.6, 3.7 (first sentence only), 4.2,
5.1 (only with respect to Collaboration Products for which a first-in-man
clinical trial has not been initiated as of the effective date of such
termination) and 6.3 (only with respect to Data generated and Regulatory Filings
filed after the effective date of such termination and without limiting either
Party’s obligations under Sections 6.2.2, 6.2.3 or 6.2.4) shall terminate.  For
clarity, all the other provisions of this Agreement shall survive and continue
to apply as modified pursuant to this Section 12.8, including the provisions of
and each Party’s rights under Sections 12.2, 12.3 and 12.4 and the associated
provisions of this Article XII;
 
***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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12.8.2 Section 8.5.8
 
  From and after the effective date of such termination, the terms and
conditions of Section 8.5.8 shall apply only to Acne Products and Impetigo
Products, but no other Collaboration Product;
 
12.8.3 Field
 
  The Field shall be limited to the Primary Indications and all Accepted
Indications, if any, as of the effective date of such termination;
 
12.8.4 In-Process Collaboration Products
 
 The words “Collaboration Products” shall be replaced in each instance in
Sections 7.1.1(b), 7.1.1(c), 7.1.1(d) and 7.1.2(b) with the words “In-Process
Collaboration Products.”  Similarly, Section 7.1.2(c) shall be replaced in its
entirety with the following:
 
“a non-exclusive license under the Galderma Technology to make, use, sell, offer
for sale, import and otherwise exploit (i) Aganocide Products outside the
Dermatology Field anywhere in the world, and (ii) In-Process Collaboration
Products within the Dermatology Field solely in the NovaBay
Territory.  Notwithstanding the foregoing, NovaBay shall not have the right to
exercise the licenses granted pursuant to this Section 7.1.2(c) with respect to
Galderma Technology in a manner that can reasonably be expected to (A) create a
risk of Multiple-Field/Territory Product Substitution as described in
Section 2.4.2, or (B) otherwise compete with Galderma products in the
Dermatology Field in the Galderma Territory;” and
 
12.8.5 Data
 
  Notwithstanding anything herein to the contrary, neither Party (or its
designees) shall have the right to access or use any Data  generated by or under
authority of the other Party from and after the effective date of such
termination, except each Party shall have access and the right to use and file
with Regulatory Authorities in connection with the exercise of its ongoing
licenses in Sections 7.1 (as modified pursuant to Section 12.8.4) safety and
other Data to the extent necessary for purposes of filings with Regulatory
Authorities related thereto and then solely for such purpose).
 
12.9 Termination Pursuant to Section 12.3.2
 
  If Galderma terminates NovaBay’s licenses under Section 7.1.2(c) pursuant to
Section 12.3.2, then the remainder of the terms and conditions of this Agreement
shall remain in full force and effect.  For clarity, the Agreement shall remain
subject to termination as set forth in and subject to the provisions of this
Article XII.
 
12.10 Termination Press Releases
 
  In the event of termination of this Agreement for any reason, the Parties
shall cooperate in good faith to coordinate public disclosure of such
termination and the reasons therefor, and shall not, except to the extent
required by applicable Law, disclose such information without the prior approval
of the other Party, such approval not to be unreasonably withheld, conditioned
or delayed.  To the extent possible under the situation, the terminating Party
shall provide the non-terminating Party with a draft of any such public
disclosure it intends to issue five (5) business days in advance and with the
opportunity to review and comment on such statement, it being understood that if
the non-terminating Party does not notify the terminating Party in writing
within such five (5) business day period (or such shorter period if required by
applicable Law and as notified to the non-terminating Party in writing) of any
reasonable objections, such disclosure shall be deemed approved, and in any
event the Parties shall work diligently and reasonably to agree on the text of
any such proposed disclosure in an expeditious manner.  The principles to be
observed in such disclosures shall be accuracy, compliance with applicable Law
and regulatory guidance documents, reasonable sensitivity to potential negative
reactions to such news and the need to keep investors and others informed
regarding the Parties’ business and other activities.  Accordingly in such
situation, the non-terminating Party shall not withhold, condition or delay its
approval of a proposed disclosure that complies with such principles.
 
***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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ARTICLE XIII
 

 
DISPUTE RESOLUTION
 
13.1 Dispute Resolution
 
  The Parties recognize that from time to time during the Agreement Term
disputes, controversies or claims as to matters arising from or relating to this
Agreement may arise including with respect to subsequent amendments, or the
validity, enforceability, construction, performance or breach hereof (and
including the applicability of this Article XIII to any such dispute,
controversy or claim) (each a “Dispute”).  It is the objective of the Parties to
establish procedures to facilitate the resolution of Disputes in an expedient
manner by mutual cooperation and without resort to litigation.  Accordingly, the
Parties agree that any Dispute shall be resolved by the Parties as follows:
 
13.2 Pre-Arbitration Dispute Resolution
 
  No Dispute under this Agreement shall be referred to arbitration proceedings
under Section 13.3 until the following procedures in this Section 13.2 have been
satisfied.  The Chief Executive Officers of NovaBay and Galderma (or their
respective direct report designee) shall meet as soon as practicable, as
reasonably requested by either Party to attempt to resolve such Dispute.  If the
Dispute is not resolved by the Chief Executive Officers (or their designees) by
mutual agreement within thirty (30) days after a meeting to discuss the Dispute,
either Party may at any time thereafter provide the other Party notice of its
decision to commence arbitration proceedings in accordance with the procedures
set forth in Section 13.3.
 
13.3 Arbitration
 
  The arbitration shall be conducted (i) in English, provided that either Party
may submit testimony or documentary evidence in any language if it furnishes,
upon the request of the other Party, a translation into English of any such
testimony or documentary evidence, (ii) by a single arbitrator, and (iii) by the
Judicial Arbitration and Mediation Services, Inc. (“JAMS”) in accordance with
the JAMS Streamlined Arbitration Rules & Procedures, except where those
procedures conflict with this Article XIII, in which case this Article XIII
shall control.  The location of the arbitration shall be New York City, New
York, USA.
 
13.3.1 Arbitrator
 
  The arbitrator shall be selected within twenty (20) business days from
commencement of the arbitration pursuant to agreement of the Parties or through
selection procedures set forth in Rule 12 of the JAMS Streamlined Arbitration
Rules & Procedures, provided that, if the issues in dispute involve scientific,
technical or commercial matters, including matters relating to inventorship,
ownership or the validity or scope of any Patent or trademark rights, then the
arbitrator shall retain an independent expert with substantial experience with
respect to the area of dispute to assist the arbitrator in understanding and
assessing such matters.
 
***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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13.3.2 Substantive Law
 
  The arbitrator shall apply the substantive law of New York to the underlying
dispute.  This agreement to arbitrate shall be governed by Title 9 (Arbitration)
of the United States Code, including without limitation Chapter Two thereof.
 
13.3.3 Enforcement/Service
 
  Any application to enforce this Section 13.3 or to confirm, vacate or modify
any award rendered pursuant to this Section 13.3 shall be brought only in the
federal or state courts located in the County of New York in the State of New
York.  Any process related to enforcement of the arbitration award may be served
by notice in accordance with Section 14.3.  Both Parties agree to waive any
applicable objections based on personal jurisdiction or service of process in
any proceeding brought in accordance with this Section 13.3.
 
13.3.4 Confidentiality of Proceedings
 
  The arbitrator shall take necessary measures for the protection of trade
secrets and Confidential Information hereunder.  Further, the arbitrator shall
be authorized to award interim equitable relief in respect thereto.  All
proceedings and any award shall be confidential, and the Parties agree not to
disclose or otherwise use any information obtained from the other Party in
connection with any arbitration except to the extent required by Law, or to a
Party’s accountants, attorneys or agents or to enforce any award, or to the
extent the information has been lawfully obtained from Third Parties or is
publicly available through other sources.
 
13.3.5 Costs
 
  The Parties shall bear equally the costs of the administrative costs of
arbitration including the costs of JAMS, filing costs, hearing fees, the
arbitrator, any independent expert and similar costs.  Each Party shall bear its
own costs and attorneys’ and witness fees and associated costs and
expenses.  Notwithstanding the foregoing provisions of this Section 13.3.5, if
the arbitrator determines it warranted he/she may shift any or all of the costs
of an arbitration under this Section 13.3 to the losing Party, if one is
designated.
 
              13.4 Provisional Remedies
 
  Nothing in this Agreement shall limit the right of either Party to seek to
obtain in any court of competent jurisdiction any equitable or interim relief or
provisional remedy, including injunctive relief.  Seeking or obtaining such
equitable or interim relief or provisional remedy in a court shall not be deemed
a waiver of this Agreement to arbitrate.  For clarity, any such equitable
remedies shall be cumulative and not exclusive and are in addition to any other
remedies that either Party may have under this Agreement or applicable Law.
 
***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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ARTICLE XIV
MISCELLANEOUS
      14.1 Governing Law
 
 This Agreement and any Dispute shall be governed by and construed and enforced
in accordance with the Laws of the State of New York, without reference to
conflicts of laws principles.
 
14.2 Assignment
 
  This Agreement shall not be assignable by either Party to any Third Party
without the written consent of the other Party, not to be unreasonably withheld,
conditioned or delayed.  Notwithstanding the foregoing, either Party may assign
this Agreement, without the written consent of the other Party, to an entity
that acquires all or substantially all of the business or assets of such Party
to which this Agreement pertains (whether by merger, reorganization,
acquisition, sale or otherwise), and agrees in writing to be bound by the terms
and conditions of this Agreement.  If any permitted assignment would result in
withholding or other similar taxes becoming due on payments to the other Party
under this Agreement, such payments shall be subject to such withholding tax
Laws as may be applicable and, if such Laws require a withholding to be made
from such payments, the payments net of withholding taxes shall constitute full
compliance with this Agreement.  No assignment or transfer of this Agreement to
any Third Party shall be valid and effective unless and until the
assignee/transferee agrees in writing to be bound by the provisions of this
Agreement.  The terms and conditions of this Agreement shall be binding on and
inure to the benefit of the permitted successors and assigns of the
Parties.  Except as expressly provided in this Section 14.2, any attempted
assignment or transfer of this Agreement to any Third Party shall be null and
void.
        14.3 Notices
      Any notice, request, delivery, approval or consent required or permitted
to be given under this Agreement shall be in writing and shall be deemed to have
been sufficiently given if delivered in person, transmitted by facsimile
(receipt verified), transmitted by email (receipt verified and followed by copy
either by express courier or registered letter), or by express courier service
(signature required) or five (5) days after it was sent by registered letter,
return receipt requested (or its equivalent), provided that no postal strike or
other disruption is then in effect or comes into effect within two (2) days
after such mailing, to the Party to which it is directed at its address,
facsimile number, email address shown below or such other address or facsimile
number as such Party will have last given by notice to the other Party.
 
If to NovaBay, addressed to:
NovaBay Pharmaceuticals, Inc.

5980 Horton Street, Suite 550
Emeryville, California 94608
Attention:  Chief Executive Officer
Telephone:  (510) 595-1100
Facsimile:  (415) 329-2034
Email:  rnajafi@novabaypharma.com
 
***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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With a copy to:
Wilson Sonsini Goodrich & Rosati

Professional Corporation
650 Page Mill Road
Palo Alto, CA  94304-1050
Attention:  Ian B. Edvalson, Esq.
Telephone:  (650) 493-9300
Facsimile:  (650) 493-6811
Email:  iedvalson@wsgr.com
 
If to Galderma, addressed to:              Galderma International
Tour Europlazza
La Defense 4-20
Avenue Andre Prothin F 92927
LA DEFENSE CEDEX
 
France

 
Attention:  General Counsel

Telephone:  +41-21-641-1151
Facsimile:  +41-21-641-1161
Email:  lydie.frere@galderma.com
 
 
With a copy to:
Debevoise & Plimpton LLP

919 Third Avenue
New York, NY  10022
Attention:  Kevin A. Rinker, Esq.
Telephone:  (212) 909-6569
Facsimile:  (212) 521-7569
Email:  karinker@debevoise.com
14.4 Waiver
 
  Neither Party may waive or release any of its rights or interests in this
Agreement except in writing.  The failure of either Party to assert a right
hereunder or to insist upon compliance with any term or condition of this
Agreement shall not constitute a waiver of that right or excuse a similar
subsequent failure to perform any such term or condition.  No waiver by either
Party of any condition or term in any one or more instances shall be construed
as a continuing waiver of such condition or term or of another condition or
term.
 
14.5 Severability
 
  If any provision hereof should be held invalid, illegal or unenforceable in
any jurisdiction, the Parties shall negotiate in good faith a valid, legal and
enforceable substitute provision that most nearly reflects the original intent
of the Parties and all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the Parties as nearly as may be possible.  Such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction.  If a
Party seeks to avoid a provision of this Agreement by asserting that such
provision is invalid, illegal or otherwise unenforceable, the other Party shall
have the right to terminate this Agreement upon sixty (60) days’ prior written
notice to the asserting Party, unless such assertion is eliminated and cured
within such sixty (60) day period.  If such termination is by NovaBay, it shall
be deemed a termination under Section 12.3 by reason of a breach by Galderma,
and if such termination is by Galderma, it shall be deemed a termination under
Section 12.3 by reason of a breach by NovaBay.
 
***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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14.6 Entire Agreement/Modification
 
  This Agreement, including its Exhibits, sets forth all the covenants,
promises, agreements, warranties, representations, conditions and understandings
between the Parties and supersedes and terminates all prior agreements and
understandings between the Parties.  No subsequent alteration, amendment, change
or addition to this Agreement shall be binding upon the Parties unless reduced
to writing and signed by the respective authorized officers of the Parties.
 
14.7 Relationship of the Parties
 
  The Parties agree that the relationship of NovaBay and Galderma established by
this Agreement is that of independent contractors.  Furthermore, the Parties
agree that this Agreement does not, is not intended to, and shall not be
construed to, establish an employment, agency or any other relationship.  Except
as may be specifically provided herein, neither Party shall have any right,
power or authority, nor shall they represent themselves as having any authority
to assume, create or incur any expense, liability or obligation, express or
implied, on behalf of the other Party, or otherwise act as an agent for the
other Party for any purpose.
 
14.8 Force Majeure
 
  Except with respect to payment of money, neither Party shall be liable to the
other for failure or delay in the performance of any of its obligations under
this Agreement for the time and to the extent such failure or delay is caused by
earthquake, riot, civil commotion, war, terrorist act, strike, flood, or
governmental acts or restriction, or other cause that is beyond the reasonable
control of the respective Party.  The Party affected by such force majeure will
provide the other Party with full particulars thereof as soon as it becomes
aware of the same (including its best estimate of the likely extent and duration
of the interference with its activities), and will use commercially reasonable
efforts to overcome the difficulties created thereby and to resume performance
of its obligations as soon as practicable.  If the performance of any such
obligation under this Agreement is delayed owing to such a force majeure for any
continuous period of more than one hundred eighty (180) days, the Parties will
consult with respect to an equitable solution, including the possibility of the
mutual termination of this Agreement.
 
14.9 Compliance with Laws
 
  Notwithstanding anything to the contrary contained herein, all rights and
obligations of NovaBay and Galderma are subject to prior compliance with, and
each Party shall comply with, all United States and foreign export and import
Laws, and such other United States and foreign Laws as may be applicable,
including obtaining all necessary approvals required by the applicable agencies
of the governments of the United States and foreign jurisdictions.
 
***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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14.10 Counterparts
 
 This Agreement may be executed in two counterparts (including via facsimile or
otherwise electronically), each of which shall be deemed an original, and all of
which together, shall constitute one and the same instrument.
 
[The remainder of this page intentionally left blank; the signature page
follows.]
***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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IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate
originals by their duly authorized representatives as of the Effective Date.
 
NOVABAY PHARMACEUTICALS,
INC.                                                                                                 GALDERMA
S.A.
 
By:                                                                                            By:
 
Name: Ron Najafi,
PhD                                                                                    Name:
Humberto C.
Antunes                                                                    
 
Title: Chairman and
CEO                                                                                Title:  CEO                                                                    
 

 
List of Exhibits:
 
Exhibit 1.6:  Aganocide Compound
Exhibit 1.55:  NovaBay Territory
Exhibit 6.1.4:  Manufacturing Cost
Exhibit 6.1.5:  Supply Agreement Terms and Conditions
Exhibit 8.5:  Example of Royalties
Exhibit 8.5.9:  Example of Net Sales Allocation for Royalties
Exhibit 10.4.1:  Press Release

EXHIBIT 1.6
 
AGANOCIDE COMPOUND
 
For purposes of this Agreement and for purposes of providing specific examples
but without limiting the definition in Section 1.6, Aganocide Compounds shall
include compounds with the following chemical formula:
 
[***]
 
Examples of which include but are not limited to the following:

 
[***]
 

***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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EXHIBIT 1.55
 
NOVABAY TERRITORY
Afghanistan
Bahrain
Bangladesh
Bhutan
Brunei
Cambodia
China, The People’s Republic (including Hong Kong and Macao)
Cook Islands
East Timor
Fiji
India
Indonesia
Iran
Iraq
Israel*
Jordan*
Kazakhstan
Kiribati
Kuwait*
Kyrgyz
Laos
Lebanon*
Malaysia
Maldives
Marshall Islands
Micronesia
Mongolia
Myanmar
Nauru
Nepal
Niue
North Korea
Oman
Pakistan
Palau
Palestine*
Papua New Guinea
Philippines
Qatar
Samoa
Saudi Arabia*
Singapore
Solomon Islands
South Korea
Sri Lanka
Syria*
Taiwan (Republic of China)
Tajikistan
Thailand
Tonga
Turkey*
Turkmenistan
Tuvalu
United Arab Emirates*
Uzbekistan
Vanuatu
Viet Nam
Yemen

* indicates this country is subject to the provisions of Section 4.6
 
***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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EXHIBIT 6.1.4
 
MANUFACTURING COST
 
“Manufacturing Cost”1 means, with respect to a Collaboration Compound supplied
by NovaBay or a Collaboration Product supplied by Galderma hereunder, amounts
incurred or accounted for by NovaBay or Galderma, as applicable, for the sum of
(i) Actual Materials Cost, (ii) Actual Labor Cost, and (iii) Allocable Overhead,
in each case calculated in accordance with Accounting Standards; provided,
however with respect to Collaboration Compound (or component thereof) acquired
or licensed by NovaBay from a Third Party or a Collaboration Product (or
component thereof) acquired or licensed by Galderma from a Third Party, the
Manufacturing Costs for such Collaboration Compound or Collaboration Product, as
applicable, (or component thereof) shall be deemed to be the amount paid
therefor to such Third Party, plus Actual Materials Cost, Actual Labor Cost,
Allocable Overhead incurred or accounted for by NovaBay or Galderma, and
licensing fees (if any) paid to Third Parties, as applicable for the quality
control, storage, handling, processing, preparation and transfer of such
purchased Collaboration Compound or Collaboration Product.  Upon prior request,
a Party will provide the other Party with documentation evidencing the other
Party’s accounting of the items identified in the foregoing subclauses (i)
through (iii).
 
(A)           “Actual Materials Cost” means the actual unit cost of all raw
materials multiplied by the actual number of units of such raw materials
consumed in the manufacture of Collaboration Compound or the Manufacture of
Collaboration Product, as applicable, including any yield variances and any
write-offs caused by obsolescence, accident and book-to-physical differences, in
each case occurring in the normal course of the manufacturing process.
 
(B)           “Actual Labor Cost” means actual employee costs allocable to the
manufacture Collaboration Compound or Manufacture of Collaboration Product, as
applicable, which are as follows: salaries, payroll taxes, employee benefits,
holiday, sickness, overtime pay and bonuses with respect to such employees.  For
clarity, Actual Labor Costs shall exclude any employee costs associated with
equity incentive plans.
 
(C)           “Allocable Overhead” means: (i) depreciation of or rent/lease
expenses for property, plant or equipment, (ii) plant management (e.g.,
supervisors, human resources and purchasing), (iii) plant services (e.g.,
engineering, and production planning), (iv) plant utilities, (v) plant
maintenance, (vi) freight and storage costs (at any stage in manufacturing),
(vii) cost accounting, data processing and information systems services,
(viii) non-reimbursable taxes and duties (excluding income tax), (ix) expenses
related to environmental protection, (x) costs of security and surveillance, and
(xi) costs of plant fire insurance protection, in each case allocable to or used
in the manufacture of Collaboration Compound or Manufacture of Collaboration
Product, as applicable.  For clarity, Allocable Overhead excludes (a) all costs
and charges related to or occasioned by or for idle or excess manufacturing
capacity, (b) the manufacture of other products (other than Collaboration
Compound or Collaboration Product), and (c) depreciation of or rent/lease
expenses for property, plant or equipment not related to manufacturing of
Collaboration Compound or Manufacturing of Collaboration Product, as applicable.

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1      Manufacturing Costs will be subject to annual review.
 
***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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EXHIBIT 6.1.5
 
SUPPLY AGREEMENT TERMS AND CONDITIONS
 
The Supply Agreements shall include and be consistent with the following terms
and conditions, unless otherwise agreed to by the Parties:
 
Product Supply: NovaBay will have the right and obligation to supply (or have
supplied), to the extent provided in Section 5.1 of the Agreement, Collaboration
Compounds meeting the applicable Specification that are forecasted and ordered
by Galderma, its Affiliates and Marketing Partners.  Similarly, Galderma will
have the right and obligation to supply (or have supplied), to the extent
provided in Section 5.1 of the Agreement, Collaboration Products meeting the
applicable Specifications that are forecasted and ordered by NovaBay, its
Affiliates, Japanese Partners and sublicensees.  Each such particular
Collaboration Compound or Collaboration Product, referred to for purposes of
this Exhibit 6.1.5 as a “Product.”  “Specification” will be defined in more
detail in the Quality Agreement (as described below) to meet the mutually agreed
upon analytical and quality specifications (including GMP) for the Product, as
applicable, necessary to meet the requirement of the applicable Marketing
Approvals or otherwise mutually agreed by the Parties, including, as applicable,
packaging and shipping specifications.
 
Forecast: The Party so ordering the Product (the “Ordering Party”) will provide
the other Party (the “Supplying Party”) with a twelve (12) month rolling
forecast, the first three (3) months of which shall be binding for the
requirements for Product.  The requirements and responsibilities of both Parties
shall be finalized in the Supply Agreement.
 
Orders: Orders will be made pursuant to a mutually agreed form of purchase
order.  Any additional or inconsistent terms or conditions of any purchase
order, acknowledgment or similar standardized form given or received shall have
no effect and such terms and conditions will be excluded.
 
Invoicing: The Supplying Party will invoice the Ordering Party for Product at
the time of shipment.  All payments will be made net 30 days from date of
invoice.
 
Shipping: Delivery of Product shall be FOB (U.C.C.) for shipments within the
United States and FCA (Incoterms 2000) for other shipments, in either case from
the final place of manufacture.  The Supplying Party shall load all Product onto
Ordering Party’s designated carrier at Supplying Party’s facilities, and title
and risk of loss shall thereof pass to Ordering Party when the Product is
loaded.
 
Quality: The process for release of each Product, and the responsibilities for
GMP compliance and regulatory activities will be detailed in a “Quality
Agreement.”  The Quality Agreement will be negotiated between Supplying Party
and Ordering Party in good faith and include standard and customary terms and
conditions and be incorporated into the Supply Agreement by reference and
executed prior to manufacture of process validation lots.  In the event that
Supplying Party and Ordering Party are unable to agree on whether a certain lot
of Product is defective, retained samples of the lot in question shall be
submitted to a mutually agreed independent reference lab to be described in more
detail in the Quality Agreement.  The results of the independent lab testing
shall be binding.  The cost of testing shall be borne by Supplying Party if such
lab determines that the Product is found to be defective or by Ordering Party if
such lab determines that the Product is in conformance with the
Specifications.  In the event of a determination that the Product is not
defective, Ordering Party shall promptly pay Supplying Party for all such
Product, including any allegedly defective Product shipped to Ordering
Party.  In the event of a determination that the Product is defective, the order
for such Product will be canceled and Ordering Party will make a separate order
therefor after discussions with Supplying Party.
 
***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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Supply Failure: If Supplying Party materially fails to supply, or have supplied,
quantities of Product that it is required to supply, except as a result of a
default by Ordering Party or force majeure event, Supplying Party will, at
Ordering Party’s written request, provide Ordering Party (including any Third
Party contract manufacturer designated by the Supplying Party) with access to
and the right to use, without charge (other than the administrative costs of
transfer), all Supplying Party manufacturing intellectual property (including
Patents, Know-How, and related information and materials) necessary or
reasonably useful to manufacture such Product, except that Ordering Party shall
not exercise such rights (i) through a competitor of Supplying Party, or (ii) in
any country that does not adhere to and respect internationally recognized
intellectual property and trade regulations.  The Supply Agreement will include
mechanisms for the transfer of such intellectual property to Ordering Party in
the event of such failure to supply.  If Ordering Party elects to exercise such
rights to manufacture or have manufactured Product, then, at such time as
Supplying Party or its contract manufacturer can reasonably demonstrate its
ability to again supply Product in accordance with the Supply Agreement, such
manufacturing rights of Ordering Party shall cease and Supplying Party shall
have the right to supply Product.
 
Second Source of Supply: Upon Galderma’s request, NovaBay shall develop a plan
and budget for a qualified second source of supply capable of supplying the
Collaboration Compounds for Galderma’s approval.  The second source supplier
shall be under the control of NovaBay and may be an alternative manufacturing
facility owned by NovaBay or consist of one or more subcontractor relationships
with Third Parties established by NovaBay.  Galderma shall be responsible for
all reasonable and documented costs and expenses incurred by NovaBay in
establishing and maintaining the second source supplier.
 
Term: The term of the Supply Agreement will be coextensive with the Agreement
and will be subject to termination on the same terms as the Agreement.
***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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EXHIBIT 8.5

EXAMPLE OF ROYALTIES
 
Section 8.5.1 Royalties for Acne Products.
 
Example: If Annual Net Sales of Acne Products in the Galderma Territory are
[***] in a particular calendar year, the royalties payable to NovaBay shall be
calculated as follows:
 
·  
[***]

 
·  
[***]

 
·  
[***]

 
·  
[***]

 
Total Royalties = [***]
 

 
Sections 8.5.2 to 8.5.5 Royalties for Collaboration Products other than Acne
Products
 
Example: If Annual Net Sales of Anti-Bacterial Products in the Galderma
Territory are [***] and of Other Products in the Galderma Territory are [***] in
a particular calendar year, the royalties payable to NovaBay shall be calculated
as follows:
 
·  
[***]

 
·  
[***]

 
·  
[***]

 
Total Royalties = [***]
 
 
 
2 Net Sales of all Collaboration Products other than Acne Products allocable to
tier A.
 
 
3 Net Sales of all Collaboration Products other than Acne Products allocable to
tier B.
***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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EXHIBIT 8.5.9

EXAMPLE OF NET SALES ALLOCATION FOR ROYALTIES
 
Example: If Annual Net Sales of Acne Products in the Galderma Territory are
[***] ([***] in countries where no Generic Competition is present and [***] in
counties where there is Generic Competition) in a particular calendar year, the
royalties payable to NovaBay shall be calculated as follows:
 
·  
[***]

 
·  
[***]

 
·  
[***]

 
Total Royalties = [***]
 

 
 
 

 
 

 
 
4 Portion of the [***] of tier A allocable to countries where no Generic
Competition is present (i.e., [***]).
 
 
5 Portion of the [***] of tier A allocable to countries where Generic
Competition is present (i.e., [***]).
 
***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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EXHIBIT 10.4.1
 
PRESS RELEASE
 
[See attached]
***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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NovaBay and Galderma Enter into Global Agreement to Develop and Commercialize
NovaBay’s Novel Aganocide Drugs for Major Dermatological Conditions
 
-- Up To $50 Million Potential Milestones plus Double Digit Royalties On Future
Sales --
 
-- Company to Host Conference Call at 10:30 a.m. ET Today --
 
EMERYVILLE, Calif. – March 25, 2009 – NovaBay Pharmaceuticals, Inc. (NYSE
Alternext: NBY), a mid-stage biopharmaceutical company developing first-in-class
anti-infective products for the treatment and prevention of a wide range of
infections without causing resistance, today announced that it has entered into
an agreement with Galderma S.A. to develop and commercialize NovaBay’s novel
proprietary Aganocide® compounds. The exclusive agreement is worldwide in scope,
with the exception of certain Asian markets, and covers all major dermatological
conditions, excluding onychomycosis (nail fungus) and orphan drug indications.
 
Under the terms of the agreement, NovaBay expects to receive from Galderma up to
$50 million upon achievement of certain development and regulatory milestones
related to the acne and impetigo indications and future royalties on net sales
of products. The agreement also envisages further cooperation for additional
dermatological products and indications. Under the agreement, NovaBay will also
receive escalating double-digit royalties on net sales of products.
 
Galderma will be responsible for the development costs of the acne and other
indications, except in Japan, and for the ongoing development program for
impetigo, upon the achievement of a specified milestone. Galderma will also
reimburse NovaBay for the use of its personnel in support of the collaboration.
NovaBay retains the right to co-market products resulting from the agreement in
Japan. In addition, NovaBay has retained all rights in other Asian markets
outside Japan, and has exclusive rights to promote the products developed under
the agreement in the hospital and other healthcare institutions in North
America. 
 
“This agreement highlights Galderma’s commitment to the future of dermatology.
Aganocide compounds have the potential to bring about significant progress in
the treatment of skin diseases which affect millions of patients, without adding
to the growing problem of antibiotic resistance,” said Humberto C. Antunes,
Chief Executive Officer of Galderma. “Galderma is glad to be working with
NovaBay in this important and very promising endeavor.”
 
***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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“We are very pleased to have entered into this collaboration with Galderma, the
world-leader in dermatology. We believe that Galderma’s demonstrated
development, regulatory and marketing capabilities, backed by its unrivaled
reputation and track record of success, will enable NovaBay to benefit from
accelerated development timelines and global commercial expertise,” said Dr. Ron
Najafi, Chairman and Chief Executive Officer of NovaBay. “Like our alliance with
Alcon in the ophthalmic, otic and sinus fields, this agreement represents
another major validation of the potential for our novel Aganocide products in
treating infections caused by a wide range of bacteria, viruses and fungi.”
 
Our collaborations with Alcon and Galderma provide significant future
revenue-generating potential for NovaBay, with favorable economic-sharing for
the company’s unique, differentiated products that address large, global
dermatological and ophthalmic markets. Conference Call
 
NovaBay will hold a conference call today, March 25, 2009 at 10:30 a.m. ET, to
discuss its Galderma collaboration.  The conference call will be simultaneously
web cast on NovaBay’s web site.
Conference call details:
Date:    Wednesday, March 25, 2009
Time:    10:30 a.m. ET
Dial-in (U.S.):   888-396-2384
Dial-in (International): 617-847-8711
Web cast:   http://www.novabaypharma.com
Passcode:   48544871
To access audio replay:
Access # (U.S.):  888-286-8010
Access # (International): 617-801-6888
Replay Passcode:  94169247
 
About Aganocide Compounds
The Aganocide compounds are novel, proprietary, synthetic N-chlorinated
antimicrobial molecules specifically designed by NovaBay to mimic the body’s
natural defense against infection.  These compounds may deliver the same or
better efficacy as currently used antibiotics without contributing to the
growing rise of bacterial resistance.  This new class of highly differentiated
compounds is ideally suited to meet numerous unmet needs in dermatology and
other applications, while currently available therapies do not provide adequate
treatment and often cause unwanted side effects.  The Aganocide compounds have
shown in preclinical trials to date to be highly effective against the bacteria,
viruses and fungi associated with a wide range of dermatological and other
conditions.  They have also been demonstrated to be effective against bacteria
in biofilm, which render most antibiotics ineffective.  The combined
anti-bacterial and anti-fungal properties and activity of these compounds make
them uniquely able to address the multi-factorial causes of many skin and other
disorders.  These compounds have a potentially broad therapeutic index providing
a high degree of potency, good tolerability and dosing versatility and
flexibility.
 
About Acne
Acne is the most common skin disease that affects people of all races and
age-groups, but it is most common in teenagers and young adults.  An estimated
80 percent of all people between the ages of 11 and 30 suffer from outbreaks of
acne at some point, and some people in their forties and fifties are also
affected. There is a clear need for more effective antimicrobial treatments than
the currently available antibiotics.
 
***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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About Impetigo
Impetigo, a contagious skin infection that usually produces blisters or sores on
the face, neck, hands, and diaper area, is one of the most common skin
infections among children.  It also occurs in adults. Impetigo is contagious and
can be spread from one person to another through close contact or by sharing
towels, sheets, clothing, toys, or other items.  Scratching can also spread the
sores to other parts of the body.
 
Impetigo is caused by one of two types of bacteria - strep (streptococcus) or
staph (staphylococcus).  Often these bacteria enter the body when the skin has
already been irritated or injured due to other skin problems such as eczema,
poison ivy, insect bites, chickenpox, burns, or cuts.  Children may develop
impetigo after having a cold or allergies that have caused the skin under the
nose to become raw.  However, impetigo can also develop in completely healthy
skin.
 
About Galderma
Galderma, created in 1981 as a joint venture between Nestlé and L'Oréal, is a
global leading pharmaceutical company dedicated exclusively to the field of
dermatology. The company is present in 65 countries with over 1000 sales
representatives and is committed to improving the health of skin with an
extensive line of innovative medical, corrective and aesthetic solutions to
treat a range of dermatological conditions including: acne, rosacea, fungal nail
infections, psoriasis & other steroid-responsive dermatoses, pigmentary
disorders, skin cancer and medical solutions for skin senescence. Galderma has
research and development facilities located in Sophia Antipolis (France),
Princeton, New Jersey (USA), and Tokyo (Japan). Leading worldwide dermatology
brands include Differin®, Epiduo®, Oracea®, MetroGel® 1%, Rozex®, Clobex®,
Tri-Luma®, Loceryl® and Cetaphil®. For more information on Galderma, visit
www.galderma.com.
 
About NovaBay Pharmaceuticals, Inc.
 
NovaBay Pharmaceuticals is a mid-stage biopharmaceutical company focused on
developing its proprietary and patented Aganocide compounds, first-in-class,
novel, synthetic anti-infective product candidates that are bioequivalent to the
active antimicrobial molecules generated within white blood cells to treat and
prevent a wide range of infections without causing resistance.  NovaBay has
internal development programs aimed at addressing hospital and respiratory
infections.  The company has a licensing and research collaboration agreement
with Alcon, Inc. for use of its Aganocides in the eye, ear and sinus, and in
contact lens solutions.  NovaBay has entered into an agreement with Galderma
S.A. to develop and commercialize Aganocides in acne, impetigo and other
dermatological indications.  NovaBay® and Aganocide® are trademarks of NovaBay
Pharmaceuticals, Inc.  For more information on NovaBay, visit www.
novabaypharma.com.

***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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Cautionary Information Regarding Forward-Looking Statements
 
This press release includes forward-looking statements, within the meaning of
the Private Securities Litigation Reform Act of 1995, that are subject to risks,
uncertainties and other factors, including the risk that Galderma and NovaBay
may be unable to advance the development of NovaBay’s Aganocide® compounds for
various dermatological indications such as acne, impetigo and other major
conditions.  Examples of such statements include, but are not limited to, any
statements relating to the timing, scope or expected outcome of the NovaBay's or
Galderma’s clinical development of its drug candidates, the potential benefits
of the Company's drug candidates and the size of the potential market for the
Company's products. Such statements are based on management's current
expectations, but actual results may differ materially due to various factors. 
These statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected in these forward-looking
statements. These risks and uncertainties include, among others, the risk that
results obtained in animal models may not be obtained in humans, and the risk of
unexpected delays in the regulatory process may delay the commencement or
completion of clinical trials.  Other risks relating to NovaBay and Aganocide®
compounds, including risks that could cause actual results to differ materially
from those projected in the forward-looking statements in this press release,
are detailed in NovaBay’s Quarterly Report on Form 10-Q/A for the period ended
September 30, 2008, under the caption "Risk Factors" in Item 1A of Part II of
that report, which was filed with the Securities and Exchange Commission on
November 14, 2008.
 
For more information
 
NovaBay
 
NovaBay Pharmaceuticals, Inc.
Chief Financial Officer:
Tom Paulson, 510-899-8809
tpaulson@novabaypharma.com
 
Invigorate Communications
Investor Relations:
Gregory Gin, 908-376-7737
ggin@invigoratepr.com
 
Media Relations:
Mariesa Kemble, 608-850-4745 
mkemble@invigoratepr.com
 
Galderma
 
Vice President HR & Communication
Alain Kirsch, 33 1 58 86 43 23
alain.kirsch@galderma.com
 

***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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