Exhibit 10.1

 

CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS
BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY
DISCLOSED. THE REDACTED TERMS HAVE BEEN MARKED WITH THREE ASTERISKS [***]

 

INTERNATIONAL DISTRIBUTION AGREEMENT

 

This International Distribution Agreement (the “Agreement”) is effective as of
the 16th day of April, 2020 (the “Effective Date”) by and between Shenzhen
Microprofit Biotech Co., Ltd., with its principal place of business at
Microprofit Building, 6 Gaoxin South Road, High-Tech Park, Nanshan District,
Shenzhen, P.R.China (“Microprofit”) and NovaBay Pharmaceuticals, Inc., a
Delaware corporation with its principal place of business at 2000 Powell Street,
Suite 1150 Emeryville, CA 94608 (“NovaBay”), for the purpose of defining the
rights and duties of the parties in connection with the distribution by NovaBay
of Microprofit’s Product (as defined in the Agreement).

 

WITNESSETH:

 

WHEREAS, NovaBay is engaged in the business of developing and commercializing
certain therapeutic products and has experience in the marketing, sale and
servicing of medical supplies, medical devices and pharmaceutical products;

 

WHEREAS, Microprofit has developed and owns all rights to the Product;

 

WHEREAS, NovaBay’s business partner and investor, Chongqing Pioneer Pharma
Holdings Limited (“Pioneer”), introduced NovaBay to Microprofit, and pursuant to
a certain Intermediary Distribution Agreement, dated April 16, 2020 (the
“Pioneer Agreement”), Pioneer would serve as an intermediary purchasing the
Product from Microprofit and selling such Product exclusively to NovaBay;

 

WHEREAS, NovaBay wishes to obtain from Microprofit, and Microprofit wishes to
grant to NovaBay, the right to exclusively distribute the Product in the
Territory (as defined in the Agreement) subject to the terms and conditions set
forth in this Agreement.

 

NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereby agree as follows:

 

1.     Definitions. As used in this Agreement, the terms defined below when
capitalized shall have the following meanings:

 

1.1     “Applicable Laws” means all laws, ordinances, rules and regulations of
any governmental entity or Regulatory Authority that apply to the Distribution,
development and commercialization of Product in the Territory and the activities
contemplated under this Agreement, including, but not limited to, the U.S.
Federal Food, Drug and Cosmetic Act.

 

 

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1.2     “Customer” means any customer of the Product solicited by NovaBay and
any NovaBay third party subdistributors within the Territory.

 

1.3     “Common Stock” means NovaBay’s common stock, par value $0.01.

 

1.4     “Distribute” means to sell, distribute, market, promote, solicit orders
for and provide services in connection with the Product. “Distributed”,
“Distribution” and “Distributor” have correlative meanings.

 

1.5     “Order” means a written description of the amount of Product, timing of
delivery and any other appropriate details to convey NovaBay’s desire to
purchase the Product, conforming to the requirements of the Pioneer Agreement
that is sent to Pioneer by mail, email, facsimile or similar means.

 

1.6     “Product” means Microprofit’s proprietary product of SARS-CoV-2 IgG and
IgM Antibody Combined Test Kits as currently developed for commercial sale
abroad under the name “fluorecare”. An initial draft of the specifications for
the Product as currently developed for commercial sale outside the Territory is
attached as Exhibit A and the parties shall mutually agree from time to time to
update such specifications as necessary for approval by any Regulatory
Authority.

 

1.7     “Regulatory Approvals” means any and all approvals, applications,
registrations, licenses, certifications and other requirements imposed by the
relevant Regulatory Authority (defined below), including, but not limited to,
approval of the Product by the U.S. Food and Drug Administration and approval,
if any, to obtain permission to commence marketing and sales of the Product in
the Territory (excluding any pricing or reimbursement approval).

 

1.8     “Regulatory Authority” means, in relation to the Territory, any
regulatory agency, department, bureau or other governmental entity involved in
regulating any aspect of the conduct, development, manufacture, market approval,
sale, distribution, packaging or use of the Product, including, but not limited
to, the U.S. Food and Drug Administration.

 

1.9     “Territory” means all fifty states in the United States of America, the
District of Columbia and the U.S. territories (including Puerto Rico, Guam and
the Virgin Islands).

 

2.     Appointment and Acceptance.

 

2.1     Grant of Distribution Rights. Subject to the terms and conditions of
this Agreement, Microprofit grants to NovaBay, and NovaBay accepts, an exclusive
right to Distribute the Product directly to Customers in the Territory.

 

2.2     Subdistribution. In the event NovaBay wants to appoint any third party
to Distribute the Product in the Territory, NovaBay shall enter into a written
agreement (a “Subdistribution Agreement”) with such third party containing terms
and conditions that are consistent with the terms and conditions of this
Agreement and including provisions as materially protective of the Product and
Microprofit as this Agreement. NovaBay shall, in addition to the quarterly
report provided for under Section 6.6, provide Microprofit with a complete and
updated list of third party subdistributors appointed by NovaBay for the
Distribution of the Product at the end of each quarter and otherwise upon
Microprofit’s reasonable request. Upon Microprofit’s request, NovaBay shall also
provide Microprofit with a copy of the Subdistribution Agreement with any such
third party subdistributor (which copy may be redacted for information not
relevant to the Distribution of the Product). NovaBay shall take into reasonable
consideration any concerns or issues raised by Microprofit with respect to any
such third party subdistributors and the parties agree to discuss in good faith
to resolve any such concerns or issues. In any event, NovaBay shall remain
responsible to Microprofit for all activities of its third party appointees
(including subdistributors and other subcontractors) to the same extent as if
such activities had been undertaken by NovaBay itself.

 

 

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2.3     No Distribution Outside Territory. Notwithstanding the rights granted to
NovaBay to Distribute the Product in Section 2.1 above, to the extent permitted
by Applicable Law, NovaBay shall be under no obligation to and shall not
Distribute the Product in the Territory unless and until the Product has
received all Regulatory Approvals.

 

3.     Product Orders and Inventory.

 

3.1     Product Orders. All Orders for the Product by NovaBay shall be placed
through Pioneer pursuant to the Pioneer Agreement.

 

3.2     Inventory. Microprofit shall maintain an adequate inventory of the
Product to satisfy demand for the Product with relevant expectations described
in Exhibit A, as to avoid any backorder to NovaBay’s Orders.

 

4.     Consideration. In consideration for the exclusive Distribution rights
granted under this Agreement, upon the later to occur of: (i) receipt of all
Regulatory Approvals or (ii) stockholder approval being received to increase
NovaBay’s authorized common stock at its 2020 annual meeting, NovaBay will issue
Common Stock purchase warrants, with an exercise price of $1.00, to certain
Microprofit officers including Messrs. Yan Hui Bing, Yin Bo and Gao Yang Qing
(each, a “Warrant Holder”), exercisable for an aggregate number of shares of
Common Stock equivalent to twelve percent (12%) of NovaBay’s outstanding Common
Stock on the date all Regulatory Approvals are received, with Mr. Hui Bing to
receive 6%, Mr. Bo to receive 5% and Mr. Yang Qing to receive 1% (the
“Warrants”). Each Warrant Holder represents and warrants that the statements
provided in Attachment A are true and correct as of the dates indicated therein,
and to the extent that any statements provided in Attachment A are not true and
correct, the Warrants will not be issued to such Warrant Holder.

 

5.     Marketing and Promotion.

 

5.1     Marketing and Sales Efforts. NovaBay shall use its best efforts to
promote and sell the Product within the Territory as soon as possible after all
Regulatory Approvals are obtained for the Product. Any and all costs associated
with advertising, sales, marketing, promotion, workshops, seminars, conventions,
exhibits or other selling costs in relation to the Product’s Distribution in the
Territory shall be the responsibility of NovaBay.

 

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5.2     Materials. NovaBay may use such advertising and promotional materials as
Microprofit may provide from time to time. In addition, NovaBay may create
advertising and promotional materials for the Product.

 

6.     Regulatory and Quality Assurance.

 

6.1     Regulatory Approvals. Microprofit will apply for all necessary
Regulatory Approvals in the Territory that relate to the Distribution of the
Product. NovaBay shall furnish Microprofit with such assistance and cooperation
as may be reasonably necessary in connection with securing such Regulatory
Approvals. Microprofit will keep NovaBay reasonably informed with respect to
such matters. If there is any material change(s) to Regulatory Approvals in the
U.S., Microprofit will promptly inform NovaBay of such change(s) and
Microprofit, in its reasonable judgment, may file any additional Regulatory
Approval applications with Regulatory Authorities in the Territory.

 

6.2     Permits. To the extent permitted under Applicable Law, NovaBay, at its
own cost, shall be responsible for obtaining all government and other approvals
beyond the Regulatory Approvals, including permits, registrations, licenses,
exemptions, exceptions and other permissions, etc., necessary and useful to the
lawful Distribution and use of the Product in the Territory, including without
limitation any pricing or reimbursement approvals, import and export licenses
and permits (collectively, “Permits”), unless otherwise agreed in writing by the
parties. NovaBay shall confer with Microprofit as to the type of Permits which
NovaBay may apply and keep Microprofit informed with respect to any Permit
acquisitions.

 

6.3     Regulatory. NovaBay shall comply with all Applicable Laws of the
Territory that relate to the Distribution of the Product, including, without
limitation, the following requirements: (i) prior to placing the first Order for
resale to a Customer, NovaBay shall hold all Regulatory Approvals and valid
Permits required for lawful Distribution of the Product; (ii) NovaBay shall
maintain adequate written procedures for warehouse control and Distribution of
the Product in accordance with Applicable Laws and in such a form as to enable
Microprofit and Regulatory Authorities to trace the location of the Product; and
(iii) NovaBay shall comply with Applicable Laws with regard to timely reporting
of adverse events, and shall immediately (and in any event within 24 hours)
notify Microprofit of any such adverse events. Microprofit shall have primary
responsibility for receiving and responding to any and all written or oral
Customer complaints related to the Product including maintaining a website for
all Customers in the Territory to submit complaints through. NovaBay shall refer
all written and oral complaints of any kind concerning the Product to
Microprofit as promptly as possible (and in any event within 24 hours).
Microprofit shall provide responses to all Customer complaints, whether provided
directly to Microprofit or received from NovaBay, within 24 hours. All
reportable adverse events shall be reported by Microprofit or by NovaBay on
behalf of Microprofit. Both Microprofit and NovaBay shall keep a record of all
Customer complaints.

 

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6.4     Quality Assurance. NovaBay will maintain a quality management system in
its organization and in particular will ensure that: (i) NovaBay will be able to
proceed to recall the Product if Microprofit so instructs; (ii) NovaBay will
keep a file of the locations and conditions of the Product including any
relevant batch and/or lot numbers in its Territory; and (iii) NovaBay personnel
performing under this Agreement have appropriate technical skills, training,
experience and expertise with respect to the Product to enable NovaBay to
perform its responsibilities set forth herein.

 

6.5     Recalls. NovaBay agrees that, if NovaBay discovers or becomes aware of
any fact, condition, circumstance or event (whether actual or potential)
concerning or related to the Product which may reasonably require a recall,
market withdrawal, safety alert, and/or field correction under Applicable Law
(each, a “Recall”) for the Product, NovaBay shall promptly communicate such
fact, condition, circumstance or event to Microprofit within twenty-four (24)
hours. In the event (i) any Regulatory Authority requests a Recall for the
Product, (ii) a court or other government agency of competent jurisdiction
orders a Recall, or (iii) Microprofit determines that a Recall of any Product
should be conducted, NovaBay shall promptly implement any such Recall, but in
any event not later than forty-eight (48) hours following receipt of notice from
Microprofit. Microprofit shall be solely responsible for all Recall
determinations although NovaBay shall, at its option, control all aspects of the
Recall process for the Product within the Territory, including communicating
with the applicable Regulatory Authorities or other third parties concerning the
Recall. NovaBay may not initiate or conduct a Recall of any Product without
prior written approval by Microprofit. Microprofit, at its own expense, shall
replace any Product under Recall ordered by NovaBay (whether already sold to
Pioneer, a Customer or in inventory) or provide a full refund to NovaBay for any
such Product.

 

6.6     Records and Reports. NovaBay shall provide Microprofit with quarterly
sales tracing reports that include Customer address, number of Products and any
relevant serial, batch or lot numbers in such form and by such means as
Microprofit reasonably requires.

 

6.7     Packaging. Unless otherwise approved by Microprofit in writing, NovaBay
shall not repackage or otherwise alter or modify the Product, and shall only
resell the Product in the same packaging as originally received from
Microprofit. In addition, except for the addition of information required by
Applicable Law, NovaBay shall not re-label Product supplied to NovaBay by
Microprofit hereunder without the prior written consent of Microprofit.
Microprofit is responsible for the labeling and packaging of the Product and its
regulatory compliance.

 

7.     Audit, Books and Records. Microprofit reserves the right, upon reasonable
advance notice, for it or its representatives to audit NovaBay and to reasonably
inspect NovaBay’s facilities at a day and time that will minimize any business
disruption to confirm compliance with the obligations of this Agreement once a
year, or at a frequency which is reasonably needed by Microprofit to comply with
Applicable Laws.

 

8.     Intellectual Property.

 

8.1     Product. NovaBay acknowledges that the Product and any accompanying
documentation and/or promotional or training materials are covered by
intellectual property rights owned or licensed by Microprofit; and other than as
expressly set forth in this Agreement, no license or other rights in such
intellectual property are granted to NovaBay, and all such rights are hereby
expressly reserved by Microprofit. Accordingly, NovaBay shall not (i) modify the
Product or documentation Microprofit provides to NovaBay without the prior
written approval of Microprofit or (ii) reverse engineer any Product, or
otherwise attempt to discern the trade secret information of the Product, nor
encourage or assist any third party in doing so.

 

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8.2     Trademarks. During the Term, NovaBay shall have the right to indicate to
the public that it is an authorized Distributor of the Product and to advertise
within the Territory the Product under the trademarks, marks, and trade names
that Microprofit may adopt from time to time, and their respective trademarks in
local language in the Territory (collectively, “Microprofit’s Trademarks”).
Microprofit’s Trademarks shall at all times remain the exclusive property of
Microprofit and all use of Microprofit’s Trademarks shall inure to the exclusive
benefit of Microprofit.

 

8.3     Trademark Restrictions. All representations of Microprofit’s Trademarks
that NovaBay intends to use shall be exact copies of those used by Microprofit
or shall first be submitted to Microprofit for approval (which shall not be
unreasonably withheld) of design, color and other details. NovaBay shall not
engage in any activity that would adversely affect the name, reputation or
goodwill of Microprofit or the Product. In addition, NovaBay shall fully comply
with all reasonable guidelines, if any, communicated by Microprofit concerning
the use of Microprofit’s Trademarks. In no event may NovaBay use or authorize
the use of any of Microprofit’s Trademarks whether registered, owned, or
operated by or on behalf of NovaBay. NovaBay shall not challenge or assist
others to challenge Microprofit’s Trademarks or the registration thereof or
attempt to register any trademarks, marks or trade names confusingly similar to
those of Microprofit. Any violation of the foregoing shall be deemed a material
breach of this Agreement that is incapable of cure, entitling Microprofit to
terminate this Agreement immediately upon notice to NovaBay. Except as set forth
in this Section 8, nothing contained in this Agreement shall grant or shall be
deemed to grant to NovaBay any right, title or interest in or to Microprofit’s
Trademarks. Upon termination of this Agreement, except as provided in Section
15.3.1, NovaBay shall immediately cease to use any and all of Microprofit’s
Trademarks.

 

9.     Warranty and Disclaimers.

 

9.1     Limited Product Warranty. To the extent permitted under Applicable Law,
Microprofit warrants to NovaBay and its Customers that: (i) Microprofit will
manufacture the Product in accordance with then-current good manufacturing
practices (GMP) promulgated by the applicable Regulatory Authority and other
applicable laws, rules and regulations, (ii) the Product supplied to NovaBay
hereunder will conform to the performance specifications for the Product’s shelf
life, with the Product’s performance specifications, storage condition and shelf
life described in Exhibit A and (iii) Microprofit will sell and ship Products
for Distribution under this Agreement that are less than a month old (as
measured from the date of manufacture). Microprofit warrants to NovaBay that it
will continue to make commercially reasonable efforts to increase the Product’s
reliability and shelf life. Any warranty made by NovaBay to its Customers that
differs from the limited warranty within this Agreement with respect to the
Product shall not obligate Microprofit in any way. Subject to the foregoing and
to Section 9.2 below, upon Microprofit’s confirmation of a failure of the
Product to conform to the limited warranty provided hereunder, Microprofit will,
in its sole discretion, either replace the non-conforming Product or credit
NovaBay’s account for the non-conforming Product purchase price paid therefor.

 

9.2     Warranty Limitations. Microprofit shall not be liable for misbranding
with respect to any Product labeling or package insert text generated by NovaBay
without Microprofit approval, or any translation thereof and Microprofit shall
not be liable for any Product adulteration or failure to meet the Product
specifications due to shipping, handling, storage, use or repackaging of the
Product by NovaBay, its third party contractors or their respective personnel.

 

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9.3     NovaBay Warranties. NovaBay warrants that its entry into this Agreement
is rightful and does not violate any other Agreement to which it is a party, and
its conduct in performing its obligations under this Agreement shall conform to
all Applicable Laws.

 

9.4     Disclaimer. SUBJECT TO MICROPROFIT’S WARRANTIES TO NOVABAY AS DESCRIBED
IN SECTION 9.1, AND TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE PRODUCT IS
PROVIDED TO NOVABAY ON AN “AS IS” BASIS AND WITHOUT WARRANTY OF ANY KIND. EXCEPT
AS EXPRESSLY SET FORTH IN SECTION 9.1, MICROPROFIT DOES NOT MAKE ANY OTHER
WARRANTY TO NOVABAY, WHETHER EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, WITH
RESPECT TO THE PRODUCT, SPECIFICATIONS, SUPPORT, SERVICE OR ANY OTHER MATERIALS
AND MICROPROFIT SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, NON-INFRINGEMENT, AND FITNESS FOR A PARTICULAR PURPOSE.

 

9.5     Limitation of Liability. TO THE EXTENT PERMITTED BY APPLICABLE LAW, IN
NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY INCIDENTAL, SPECIAL,
PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, COST OF PROCUREMENT
OF SUBSTITUTE GOODS, OR ANY INDIRECT DAMAGES EVEN IF SUCH PARTY HAS BEEN
INFORMED OF THE POSSIBILITY THEREOF AND NOTWITHSTANDING THE FAILURE OF ESSENTIAL
PURPOSE OF ANY LIMITED REMEDY STATED HEREIN. WITHOUT LIMITING THE FOREGOING,
BOTH PARTIES’ AGGREGATE LIABILITY ARISING OUT OF THIS AGREEMENT SHALL BE LIMITED
TO THE TOTAL AMOUNT PAID BY NOVABAY TO PIONEER FOR THE PRODUCT IN THE SIX (6)
MONTH PERIOD IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO SUCH LIABILITY.

 

10.     Training and Support. Upon NovaBay’s reasonable request, Microprofit
will use reasonable efforts to provide training to NovaBay personnel, at
NovaBay’s expenses and at times and locations mutually acceptable to both
parties. NovaBay shall provide all support on the Product to Customers.
Microprofit shall use reasonable efforts to provide technical support to NovaBay
if NovaBay is unable to resolve a technical issue with respect to the Product.
Nothing under this Section 10 shall obligate Microprofit to furnish any
assistance, information or documentation directly to any Customer.

 

11.     Insurance. Each party shall maintain insurance with a reputable
insurance company in an amount reasonably sufficient to cover all of its
obligations under this Agreement. Upon each party’s request, the other party
shall furnish to the first party a certificate of insurance evidencing that such
insurance is in effect. Each party shall notify the other party within thirty
(30) days of any cancellation or material change in its insurance policy. If
either party’s insurance policy required hereunder is cancelled or expires, such
party shall furnish the other party a new certificate evidencing that
replacement coverage is in effect.

 

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12.     Confidential Information.

 

12.1     Obligation. Except for the purposes of performing its obligations and
exercising its rights under this Agreement, during the Term (as defined in
Section 15.1) hereof and for five (5) years thereafter, each party shall hold in
confidence and not use or disclose to any third party any product, technical,
marketing, financial, business or other proprietary information (“Proprietary
Information”) disclosed to such party by the other. Both parties may disclose
the term of this Agreement in communication with existing and potential
investors, partners, acquirers, licensees, consultants, 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.

 

12.2     Limitation. Notwithstanding the foregoing, Proprietary Information
shall not include information that: (i) was publicly known or made generally
available without a duty of confidentiality prior to the time of disclosure by
the disclosing party to the receiving party; (ii) becomes publicly known or made
generally available without a duty of confidentiality after disclosure by the
disclosing party to the receiving party; (iii) is in the rightful possession of
the receiving party without confidentiality obligations at the time of
disclosure by the disclosing party to the receiving party as shown by the
receiving party’s then-contemporaneous written files and records kept in the
ordinary course of business; or (iv) is obtained by the receiving party from a
third party without an accompanying duty of confidentiality without a breach of
such third party’s obligations of confidentiality. In the event the receiving
party is legally compelled to disclose Proprietary Information of the disclosing
party, the receiving party shall provide notice as soon as is reasonably
practicable to the disclosing party, if legally permissible, and shall provide
reasonable assistance to the disclosing party to obtain a protective order or
otherwise prevent public disclosure of such Proprietary Information. If the
disclosing party fails to obtain a protective order or other appropriate remedy,
the receiving party will furnish only that portion of the Proprietary
Information that is legally required to be disclosed. Nothing in this Section 12
shall impair either party’s compliance with any requirements of the Securities
and Exchange Commission or the stock market on which such party’s securities are
traded.

 

13.     Indemnity.

 

13.1     By Microprofit. Subject to Section 13.3, Microprofit shall indemnify,
defend or settle and hold NovaBay and its other affiliates harmless from and
against any and all liabilities, damages or expenses (including reasonable legal
expenses and attorneys’ fees) (collectively, “Losses”) resulting from any suit,
claim, action or demand brought by a third party (each, a “Third Party Claim”)
arising out of: (a) any breach of any of Microprofit’s representations and
warranties under Section 9; (b) the gross negligence or intentional misconduct
of Microprofit or any of its agents, directors, officers or employees; or (c)
any acts or omissions of Microprofit or its personnel in Distributing or
developing the Product; in each case except to the extent such Third Party Claim
is covered by NovaBay’s indemnification obligations below.

 

13.2     By NovaBay. Subject to Section 13.3, NovaBay shall indemnify, defend or
settle and hold Microprofit and its affiliates harmless from and against any and
all Losses resulting from any Third Party Claim arising out of: (a) any breach
by NovaBay of its obligations, duties or responsibilities under this Agreement;
(b) the gross negligence or intentional misconduct of NovaBay or any of its
agents, directors, officers or employees, (c) any acts or omissions of NovaBay
or its personnel in Distributing the Product; in each case except to the extent
such Third Party Claim is covered by Microprofit’s indemnification obligations
above.

 

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13.3     Indemnification 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 13 and the right to control the defense (with the reasonable
cooperation of the indemnified party) and settlement of 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; provided that the indemnifying party
shall have no obligations with respect to any Losses resulting from the
indemnified party’s admission, settlement or other communication without the
prior written consent of the indemnifying party.

 

14.     Non-Assignment. Neither party shall have the right to assign, delegate,
subdivide or otherwise transfer any obligations or rights under this Agreement
without the prior written consent of the non-assigning party, which consent
shall not be unreasonably withheld. Any attempted assignment in violation of
this Section 14 shall be null and void.

 

15.     Term and Termination.

 

15.1     Term. The term of this Agreement shall commence on the Effective Date
and shall continue in full force and effect until December 31, 2021 (the
“Initial Term”), unless earlier terminated in accordance with the terms and
conditions of this Agreement. Thereafter, the parties may mutually agree in
writing to renew this Agreement for additional six-month terms (each a “Renewal
Term,” and collectively with the Initial Term, the “Term”).

 

15.2     Termination. Either party may terminate this Agreement prior to its
expiration and upon thirty (30) days prior written notice if: (a) a party
breaches any material term of this Agreement and the breaching party has not
cured the breach within such thirty (30) day period or (b) a party is the
subject of a liquidation or insolvency, or the filing of bankruptcy, or similar
proceeding(s) (provided that in the case of involuntary proceedings, such
proceedings are not dismissed within sixty (60) days of filing).

 

15.3     Effect of Termination.

 

15.3.1     Upon expiration or notification of termination of this Agreement,
NovaBay shall submit to Microprofit within thirty (30) days a list of all
Products in NovaBay’s inventory as of the effective date of expiration or
termination. Unless otherwise mutually agreed by the parties, NovaBay shall have
sixty (60) days following the expiration or termination of this Agreement to
continue to Distribute any Product in NovaBay’s inventory as of the effective
date of expiration or termination. Microprofit may also elect to repurchase
unused (brand new) Products in NovaBay’s inventory as of termination or of
expiration of this Agreement at the Price paid by NovaBay less a 10% restocking
fee. Except as otherwise permitted in this Section 15.3.1, all rights and
licenses of NovaBay hereunder with respect to the Product shall automatically
terminate and all Permits held by NovaBay shall revert to Microprofit.

 

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15.3.2     Each party shall, within thirty (30) days of the effective date of
termination or expiration, either (a) return to the other party all of the other
party’s Proprietary Information then in a party’s possession, custody or control
or (b) certify to the other party in writing that all copies of such Proprietary
Information have been destroyed.

 

15.3.3     To the extent permitted under Applicable Law, upon the termination of
this Agreement in accordance with its terms, except for obligations incurred
prior to the effective date of termination, neither party shall have any
obligation to the other party, or to any employee, agent or representative of a
party, for compensation or for damages of any kind, whether on account of loss
by a party, or by such employee, agent or representative of present or
prospective sales, investments, compensation or goodwill; provided, however,
that nothing in this Section 15.3.3 shall relieve either party of any liability
for willful misconduct, gross negligence, or breach of contract.

 

15.3.4     To the extent permitted under Applicable Law, NovaBay’s ability to
pursue selling its remaining inventory of the Product during the sixty (60) days
after expiration or termination of this Agreement pursuant to Section 15.3.1,
or, to extent otherwise expressly permitted in this Agreement, NovaBay’s right
to sell such inventory if not so repurchased by Microprofit, shall constitute
NovaBay’s sole remedy for the expiration or termination of this Agreement.

 

15.4     Survival. The provisions of Sections 6.3, 6.4, 6.5, 9.1 (with respect
to the Product under warranty), 9.2 (with respect to the Product under
warranty), 9.4, 9.5, 15.2, 15.4 and 15.5, and Sections 1 (with respect to the
Product which were in NovaBay’s inventory at the time of termination of the
Agreement), 7, 8, 11, 12, 13, 14, 19 and 20 shall survive termination or
expiration of this Agreement. All other provisions of this Agreement shall
terminate upon any termination or expiration of this Agreement.

 

15.5     Accrued Obligations. Expiration or termination of this Agreement for
any reason shall not release either party hereto from any obligation (including
payment obligations) 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, nor preclude either party from
pursuing all rights or remedies it may have hereunder or at law or in equity
with respect to any breach of this Agreement.

 

16.     Events Beyond Control. Neither party shall be liable for any failure to
fulfill any term or condition of this Agreement (other than the obligation to
pay) if fulfillment has been delayed, hindered or prevented by an event of force
majeure including, but not limited to, any strike, lockout or other industrial
dispute, acts of the elements, compliance with requirements of any governmental
port or international authority, plant breakdown or failure of equipment,
inability to obtain equipment, fuel, power, materials or transportation, or by
any circumstances whatsoever beyond its reasonable control, including, but not
limited to, demand for the Product in excess of Microprofit’s ability to produce
the Product and alleged or demonstrated infringement by the Product or its use
of any proprietary right of a third party. In any case, Microprofit will use
commercially reasonable efforts to supply confirmed Orders to NovaBay.

 

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17.     U.S. Foreign Corrupt Practices Act. Microprofit warrants that in the
performance of its obligations under this Agreement, Microprofit will not act in
any fashion or take any action which will render NovaBay liable for a violation
of the U.S. Foreign Corrupt Practices Act (“FCPA”), which prohibits the
offering, giving or promising to offer or give, directly or indirectly, money or
anything of value to any official of a government, political party or
instrumentality thereof in order to assist Microprofit or NovaBay in obtaining
or retaining business. NovaBay shall have the right to immediately terminate
this Agreement should Microprofit make any payment which would violate the FCPA.
Microprofit shall indemnify and hold NovaBay harmless, and hereby forever
releases and discharges NovaBay, from and against all losses, liabilities,
damages and expenses (including reasonable attorneys’ fees and costs) resulting
from Microprofit’s breach of this Section 17.

 

18.     Independent Contractors. The relationship of the parties established by
this Agreement is that of independent contractors, and nothing contained in this
Agreement shall be construed to create any other relationship between the
parties. Neither party shall have any right, power, or authority to assume,
create or incur any expense, liability, or obligation, express or implied, on
behalf of the other.

 

19.     Notice. All notices issued or served under this Agreement shall be in
writing and shall be deemed to have been sufficiently given if transmitted by
facsimile (receipt verified), email (receipt verified) or by express courier
service (signature required) or seven (7) days after it was sent by registered
letter. All notices shall be sent to the following, except as otherwise
specified by either party in writing:

 

 

NovaBay:

Microprofit:

NovaBay Pharmaceuticals, Inc.

2000 Powell Street, Suite 1150

Emeryville, CA 94608

United States

 

Attention:  [***]

Phone: [***]

Email: [***]

Shenzhen Microprofit Biotech Co., Ltd.

Microprofit Building

6 Gaoxin South Road,High-Tech Park

Nanshan District, Shenzhen, P.R.China

 

Attention: [***]

Phone: [***]

Email: [***]

 

20.     Miscellaneous.

 

20.1     Waiver; Amendment. The failure of either party to enforce its rights
under this Agreement at any time for any period shall not be construed as a
waiver of such rights unless evidenced in writing and signed for on behalf of
both parties. Any modification or amendment of, or addition to, the terms of
this Agreement shall not be effective unless in a writing conspicuously entitled
“Amendment of Agreement” which begins with a proposal to amend this Agreement
and specifies exactly each change to be made and which is signed by an
authorized officer of both parties.

 

20.2     Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
conflicts of laws provisions and excluding the 1980 U.N. Convention on Contracts
for the International Sale of Goods.

 

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20.3     Severability. The provisions of this Agreement under which the
liability of the parties is excluded or limited shall not apply to the extent
that such exclusions or limitations are declared illegal or void under
Applicable Laws in the Territory, unless the illegality or invalidity is cured
under the Applicable Laws of the Territory by the fact that the law of the State
of New York governs this Agreement. Subject to the foregoing, if any provision
of this Agreement is held to be void, invalid or unenforceable, the same shall
be reformed to give the fullest effect to the intention of the parties when
executing this Agreement while complying with Applicable Law or stricken if not
so conformable, so as not to affect the validity or enforceability of the
remainder of this Agreement.

 

20.4     Dispute Resolution. In the event of any dispute, controversy or claim
between the parties hereto arising out of this Agreement, the parties agree to
attempt to resolve such dispute in good faith through direct negotiations for a
period of thirty (30) days. Any dispute, controversy or claim between the
parties hereto arising out of or relating to this Agreement which cannot be
resolved through direct negotiations shall be settled by binding arbitration in
accordance with and subject to the then applicable rules (“Rules”) of the
International Chamber of Commerce (“ICC”) and such arbitration shall be
administered by ICC with a single arbitrator selected from a list of arbitrators
proposed by ICC in accordance with the Rules. The arbitrator shall allow such
discovery as is appropriate and consistent with the purposes of arbitration in
accomplishing fair, efficient and cost-effective resolution of disputes. The
costs of the arbitration including the arbitrators’ fees shall be shared equally
by the parties. Each party shall bear its own costs, including attorney’s and
witness’ fees, incurred in connection with the arbitration. Judgment upon the
award rendered in any such arbitration may be entered in any court of competent
jurisdiction, or application may be made to such court for a judicial acceptance
of the award and enforcement, as the law of such jurisdiction may require or
allow. Unless otherwise mutually agreed to by the parties, in the event NovaBay
initiates such arbitration, such arbitration shall take place in Hong Kong,
China, and in the event Microprofit initiates such arbitration, such arbitration
shall take place in San Francisco, California. Any arbitration under this
Agreement shall be conducted in English, regardless of the location for such
arbitration.

 

20.5     Language. This Agreement is in the English language only, which
language shall be controlling in all respects, and all versions hereof in any
other language shall not be binding on the parties hereto. All communications
and notices to be made or given pursuant to this Agreement shall be in the
English language.

 

20.6     Currency. All amounts specified in this Agreement are in United States
Dollars.

 

20.7     Headings. Headings herein are for convenience of reference only and
shall in no way affect interpretation of this Agreement.

 

20.8     Compliance with Applicable Law. The parties shall each comply with all
Applicable Laws in performing its duties hereunder.

 

20.9     Entire Agreement. This Agreement, and all exhibits attached hereto,
constitute the entire understanding and contract between the parties and
supersedes any and all prior and contemporaneous, oral or written
representations, communications, understandings, and agreements between the
parties with respect to the subject matter hereof. Notwithstanding the
foregoing, to the extent the terms and conditions of this Agreement conflict
with the terms and conditions of any exhibit, the terms and conditions of this
Agreement shall govern. The parties acknowledge and agree that neither of the
parties is entering into this Agreement on the basis of any representations or
promises not expressly contained herein.

 

[The remainder of this page intentionally left blank; the signature page
follows.]

 

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THE TERMS AND CONDITIONS OF THIS AGREEMENT ARE AGREED TO AND ACCEPTED BY:

 

 

Shenzhen Microprofit Biotech Co., Ltd.

 

NovaBay Pharmaceuticals, Inc.

         

Name:

Sheng TANG, Ph.D  

Name:

Justin Hall

Title:

General Manager

 

Title:

CEO

Signature:

/s/ Sheng TANG, Ph.D.  

Signature:

/s/ Justin Hall

Date:

April 17, 2020

 

Date:

April 14, 2020

 

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FOR PURPOSES OF THE REPRESENTATIONS AND WARRANTIES MADE IN SECTION 4:

 

 

 

Warrant Holders

             

/s/ Yan Hui Bing

 

By:

Mr. Yan Hui Bing

   

 

       

/s/ Yin Bo

 

By:

Mr. Yin Bo

   

 

       

/s/ Gao Yang Qing

 

By:

Mr. Gao Yang Qing

 

 

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EXHIBIT A

 

PRODUCT SPECIFICATIONS

 

Each unit of the Product consists of one SARS-CoV-2 IgG and IgM Antibody
Combined Test Kit (each, a “Unit”).

 

Product: SARS-CoV-2 IgG and IgM Antibody Combined Test Kit     Composition: 
[***]     Fill Weight:  [***]     Container:  [***]     Closure:  [***]    
Storage Condition:  [***]     Shelf Life:  [***]     Microprofit Inventory
Expectations: [***]     Performance Specifications:  [***]

 

 

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ATTACHMENT A

 

 

By execution of the Agreement, each Warrant Holder, individually and not
jointly, makes the following representations and warranties as of the date of
this Agreement, and each Warrant Holder agrees to notify NovaBay in writing if
any of the below representations and warranties are no longer true and correct
at the time of the issuance of the Warrants.

 

Investment Representations.  The Warrant Holder understands that the Warrants
(and shares of Common Stock underlying the Warrants, collectively referred to
herein as, the “Warrants”) have not been registered under the Securities Act of
1933, as amended (the “Securities Act”); provided, however, that NovaBay intends
to register the Warrants within 6-months of issuance or otherwise as soon as
reasonably practicable within NovaBay’s discretion. The Warrant Holder also
understands that the Warrants are being offered and sold pursuant to an
exemption from registration contained in the Securities Act based in part upon
the Warrant Holder’s representations contained in the Agreement.  The Warrant
Holder hereby represents and warrants as follows:

 

(a)     Warrant Holder Bears Economic Risk.  The Warrant Holder has substantial
experience in evaluating and investing in private placement transactions of
securities in companies similar to NovaBay so that he is capable of evaluating
the merits and risks of his investment in NovaBay and has the capacity to
protect his own interests.  The Warrant Holder must bear the economic risk of
this investment indefinitely until the Warrants are registered pursuant to the
Securities Act, or an exemption from registration is available. The Warrant
Holder also understands that there is no assurance that any exemption from
registration under the Securities Act will be available and that, even if
available, such exemption may not allow the Warrant Holder to transfer all or
any portion of the Warrants under the circumstances, in the amounts or at the
times the Warrant Holder might propose.

 

(b)     Investment Intent. The Warrant Holder understands that the Warrants are
“restricted securities” and have not been registered under the Securities Act,
or any applicable state securities law. The Warrant Holder is acquiring the
Warrants as principal for his own account and not with a view to, or for
distributing or reselling such Warrants or any part thereof in violation of the
Securities Act or any applicable state securities laws. The Warrant Holder does
not presently have any agreement, plan or understanding with any Person to
distribute or effect any distribution of any of the Warrants (or any securities
which are derivatives thereof) to or through any person; and the Warrant Holder
is not a registered broker-dealer under Section 15 of the Securities Exchange
Act of 1934 or an entity engaged in a business that would require him to be so
registered as a broker-dealer.

 

(c)     Warrant Holder Status. At the time the Warrant Holder was offered the
Warrants, he was, and at the date hereof he is, an “accredited investor” as
defined in Rule 501(a) under the Securities Act.

 

(d)     General Solicitation. The Warrant Holder is not acquiring the Warrants
as a result of any advertisement, article, notice or other communication
regarding the Warrants published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general advertisement.

 

 

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(e)     Experience of Warrant Holder. The Warrant Holder, either alone or
together with his representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Warrants, and has so
evaluated the merits and risks of such investment. The Warrant Holder is able to
bear the economic risk of an investment in the Warrants and, at the present
time, is able to afford a complete loss of such investment.

 

(f)     Warrant Holder Can Protect His Interest.  The Warrant Holder represents
that by reason of his business or financial experience, the Warrant Holder has
the capacity to protect his own interests in connection with the transactions
contemplated in this Agreement.  Further, the Warrant Holder is aware of no
publication of any advertisement in connection with the transactions
contemplated in the Agreement.

 

(g)     Brokers and Finders. No person will have, as a result of the
transactions contemplated by this Agreement, any valid right, interest or claim
against or upon NovaBay or the Warrant Holder for any commission, fee or other
compensation pursuant to any agreement, arrangement or understanding entered
into by or on behalf of the Warrant Holder.

 

(h)     NovaBay Information.  The Warrant Holder has had an opportunity to
discuss NovaBay’s business, management and financial affairs with directors,
officers and management of NovaBay. The Warrant Holder has also had the
opportunity to ask questions of and receive answers from NovaBay and his
management regarding the terms and conditions of this investment.

 

(i)     Rule 144.  The Warrant Holder acknowledges and agrees that the Warrants
are “restricted securities” as defined in Rule 144 promulgated under the
Securities Act as in effect from time to time and must be held indefinitely
until they are subsequently registered under the Securities Act or an exemption
from such registration is available.  The Warrant Holder has been advised or is
aware of the provisions of Rule 144, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things:  the availability of certain current
public information about NovaBay, the resale occurring following the required
holding period under Rule 144 and the number of shares being sold during any
three-month period not exceeding specified limitations.

 

(j)     Residence.  The resident of the Warrant Holder in which the Warrant
Holder’s investment decision was made is located in the Peoples Republic of
China.

 

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(k)     Regulation S. The Warrant Holder acknowledges and represents that at the
time of issuance of the Warrants, he is not a U.S. Person (as defined below),
and further provides represents and warrants:

 

(i)           the Warrants are being acquired for investment for the Warrant
Holder’s own account, not as a nominee or agent, and not for the account or
benefit of, a U.S. Person, and not with a view to the resale or distribution of
any part thereof in the United States or to a U.S. Person, and that the Warrant
Holder has no present intention of selling, granting any participation in, or
otherwise distributing the same. The Warrant Holder does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person in the United States or to
a U.S. Person, or any hedging transaction with any third person in the United
States or to a United States resident, with respect to any of the Warrants. The
Warrant Holder further acknowledges and understands that the certificate
evidencing the Warrants issued to the Warrant Holder shall bear a restrictive
legend. The Warrant Holder covenants with NovaBay, that the Warrant Holder will
not, directly or indirectly, offer, sell, pledge, transfer or otherwise dispose
of (or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Warrants received hereunder except in compliance with the
Securities Act, applicable blue sky laws, and the rules and regulations
promulgated thereunder. The Warrant Holder hereby agrees to resell such Warrants
only in accordance with the provisions of Regulation S under the Securities Act
(“Regulation S”), pursuant to registration under the Securities Act, or pursuant
to an exemption from registration. The Warrant Holder further agrees not to
engage in hedging transactions with regard to the Warrants unless in compliance
with the Securities Act. The Warrant Holder agrees that the Warrant Holder will
not effect any disposition of the Warrant that would constitute a sale within
the meaning of the Securities Act, except: (x) pursuant to the provisions of
Regulation S; or (y) in a transaction exempt from registration under the
Securities Act, in which case the Warrant Holder shall, prior to effecting such
disposition, submit to NovaBay an opinion of counsel in form and substance
reasonably satisfactory to NovaBay to the effect that the proposed transaction
is in compliance with the Securities Act;

 

(ii)           “U.S. Person” means (a) any natural person resident in the United
States, (b) any partnership or corporation organized or incorporated under the
laws of the United States (c) any estate of which any executor or administrator
is a U.S. person, (d) any trust of which any trustee is a U.S. person, (e) any
agency or branch of a foreign entity located in the United States, (f) any
non-discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary for the benefit or account of a U.S. person,
(g) any discretionary account or similar account (other than an estate or trust)
held by a dealer or other fiduciary organized, incorporated, or (if an
individual) resident in the United States, and any partnership or corporation
if: (i) organized or incorporated under the laws of any foreign jurisdiction;
and (ii) formed by a U.S. person principally for the purpose of investing in
securities not registered under the Act, unless it is organized or incorporated,
and owned, by accredited investors (as defined in §230.501(a)) who are not
natural persons, estates or trusts, provided, however, the following are not
“U.S. persons”: (u) any discretionary account or similar account (other than an
estate or trust) held for the benefit or account of a non-U.S. person by a
dealer or other professional fiduciary organized, incorporated, or (if an
individual) resident in the United States, (v) any estate of which any
professional fiduciary acting as executor or administrator is a U.S. person if:
(1) an executor or administrator of the estate who is not a U.S. person has sole
or shared investment discretion with respect to the assets of the estate; and
(2) the estate is governed by foreign law, (w) any trust of which any
professional fiduciary acting as trustee is a U.S. person, if a trustee who is
not a U.S. person has sole or shared investment discretion with respect to the
trust assets, and no beneficiary of the trust (and no settler if the trust is
revocable) is a U.S. person, (x) an employee benefit plan established and
administered in accordance with the law of a country other than the United
States and customary practices and documentation of such country, (y) any agency
or branch of a U.S. person located outside the United States if: (1) the agency
or branch operates for valid business reasons; and (2) the agency or branch is
engaged in the business of insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the jurisdiction where
located; and (z) the International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank, the Asian
Development Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar international
organizations, their agencies, affiliates and pension plans.

 

(l)     NovaBay Undertaking. NovaBay hereby undertakes, for the benefit of the
Warrant Holder, that he will not register any transfer of the Warrants not made
in accordance with the provisions of Regulation S, pursuant to a registration
statement under the Securities Act, or pursuant to an available exemption from
registration.

 

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