EXHIBIT
10.20


EXECUTIVE EMPLOYMENT
AGREEMENT




THIS
EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of July 28, 2009
by and between NovaBay Pharmaceuticals, Inc. (“Company”) and Roy J. Wu
(“Executive”).




RECITAL




The
Company and Executive desire to formalize and reflect Executive’s employment
under the terms and conditions of this Agreement.




NOW,
THEREFORE, in consideration of the foregoing recital, the mutual covenants
herein contained and for other good and valuable consideration, the parties
hereto hereby agree as follows:




I.
            EMPLOYMENT.




A.           Position and
Responsibilities.  The Company hereby employs the Executive as
its Senior Vice President for Business and Corporate
Development.  Executive shall do and perform all such services and
acts as necessary or advisable to fulfill the duties and obligations of said
position and/or such other and/or additional responsibilities as reasonably
delegated to Executive by Executive’s superior and/or the Company’s Board of
Directors (the “Board”).




B.           Term.  Executive’s
employment with the Company is at-will and shall be governed by the terms of
this Agreement, commencing on July 28, 2009 and continuing to and including
December 31, 2011, unless this Agreement is terminated at some earlier time in
accordance with the terms of this Agreement.




C.           Devotion.  Except
as heretofore or hereafter excepted by the Company in writing, during the term
of this Agreement, Executive (i) shall devote 75% of regular full time hours or
15 working days in a month to the foregoing responsibilities, (ii) except as to
the current consulting work that the Executive is working on, shall not engage
in any other business or other activity which may materially interfere with
Executive’s performance of said responsibilities, and (iii) except as to any
investment made in a publicly traded entity not amounting to more than 1% of its
outstanding equity, shall not, directly or indirectly, as an employee,
consultant, partner, principal, director or in any other capacity, engage or
participate in any business that is in competition with the
Company.  The foregoing work hours shall be reviewed on January 2,
2010 and the compensation provided herein shall be adjusted accordingly based on
the revised mutually agreed upon working hours.




D.           Services’
Uniqueness.  It is agreed that Executive’s services to be
performed under this Agreement are special, unique and extraordinary and give
rise to peculiar value, the loss of which may not be reasonably or adequately
compensated by a damages award, in any legal action.  Accordingly, in
addition to any other rights or remedies available to the Company, the Company
shall be entitled to injunctive and other equitable relief to prevent or remedy
a breach of the terms of this Agreement by Executive.







II.
            PROPRIETARY RIGHTS,
      CONFIDENTIAL INFORMATION, NONSOLICITATION,
  ETC.




Executive
has executed an agreement relating to the treatment of (and Executive’s
obligations as to) proprietary rights, confidential information, and certain
nonsolicitation and other matters.  It is further understood and
agreed that said agreement is deemed to continue in full force and effect,
binding and not affected, in any manner, by the terms in this
Agreement.




III.
            COMPENSATION AND
      BENEFITS.




Executive’s
compensation and bonus rights are as follow:




A.           
Salary.  Executive
shall be entitled to an annual salary of $172,500 (subject to such deductions,
withholding and other charges as required by law), payable in accordance with
the Company’s standard payroll schedule.  Executive’s salary shall be
subject to periodic review by the Company and may be adjusted upward by action
of the Board, after such periodic review.  This salary for $172,500
represents 3 work-week in a given month.




B.          
  Bonus. The Executive
shall be eligible for any bonus plan that is deemed appropriate by the Board of
Directors of the Company.




1.           Annual
Bonus.  Executive shall be entitled to such amount of bonus
payment, if any, as considered and approved by the Board annually (for each year
of services) during the term of this Agreement, which bonus amount shall be
determined by all factors deemed relevant for that purpose by Board and shall
include (i) the fulfillment, during the relevant year, of specific milestones
and tasks delegated, for such year, to Executive by the Company’s President
and/or the Board, (ii) the evaluation of Executive by the Company’s President
and/or the Board, (iii) the Company’s financial, product and expected progress
and (iv) other pertinent matters relating to the Company’s business and
valuation.  The amount of any annual bonus determined with respect to
performance during a calendar year or the Company’s fiscal year, as the case may
be, will be paid in full on or before the date that is 21⁄2 months following the
end of the year for which the bonus was earned. Such bonus entitlement shall be
pro-rated to time devoted by the Executive during each year.




C.            
Other
Benefits.  Executive shall be entitled to 3.75 weeks of said
vacation or 150 hours for each calendar year to be taken pursuant to the
Company’s vacation benefits policy.  Executive is also entitled to
other benefits as (i) are generally available to the Company’s other similar,
high level, executives, consisting of such medical, retirement and similar
benefits as are so available and (ii) are deemed special to Executive and
approved by the Board.




IV.           TERMINATION.




A.           
At-Will
Employment.  It is understood and agreed by the Company and
Executive that this Agreement does not contain any promise or representation
concerning the duration of Executive's employment with the Company. Executive
specifically acknowledges that his employment with the Company is at-will and
may be altered or terminated by either Executive or the Company at any time,
with or without cause and with or without notice.  In addition, that
the rate of salary, any bonuses, paid time off, other compensation, or vesting
schedules are stated in units of years or months or weeks does not alter the
at-will nature of the employment, and does not mean and should not be
interpreted to mean that Executive is guaranteed employment to the end of any
period of time or for any period of time. In the event of conflict between this
disclaimer and any other statement, oral or written, present or future,
concerning terms and conditions of employment, the at-will relationship
confirmed by this disclaimer shall control. This at-will status cannot be
altered except in a writing signed by Executive and approved by the
Board.







B.           
Termination of
Employment.  Although Executive’s employment hereunder shall be
deemed “at will,” any termination shall be subject to the following
terms:




1.           For
Cause.  In the event that Executive is terminated for cause, as
hereinafter defined, Executive shall be entitled an amount equal to $15,000
which will be paid in a lump sum within 60 days of such termination for
cause.  This amount is in addition to Executive’s earned wages through
the date his employment with the Company is terminated, his accrued but unused
vacation, reimbursements of his outstanding expenses incurred and submitted in
compliance with Company policies and any other portion of his compensation
earned through the termination date.




2.           Without
Cause.  In the event that Executive is terminated without
cause, as hereinafter defined, Executive shall be entitled to an amount equal to
three (3) months of the rate of salary then being paid to Executive as of the
date of such termination plus the amount of the bonus (if any) paid or payable
to Executive relative to services performed by Executive during the previous
calendar year.  The amounts payable under this Section IV.B.2 shall be
in addition to Executive’s earned wages through the date his employment is
terminated from the Company, his accrued but unused vacation, reimbursements of
his outstanding expenses incurred and submitted in compliance with Company
policies and any other portion of his compensation earned through the
termination date.




C.           
Related
Provisions.  The following terms, conditions and definitions
shall apply to the termination of Executive:




1.           “Termination Without
Cause.”  For purposes of Section IV.B above, a termination
without cause shall be deemed to constitute any termination of Executive’s
employment hereunder by the Company, or by Executive, other than a termination
for cause as defined below.  Notwithstanding any contrary provision
herein, it is understood that a termination without cause also shall include a
termination which either:




(a)           occurs
due to the death of Executive or to any physical or mental Long-Term Disability
that would prevent the performance of Executive’s duties under this
Agreement.  For the purposes of this Agreement, a “Long-Term
Disability” shall mean a long-term disability that after consideration and
implementation of reasonable accommodations (provided that no accommodation that
imposes undue hardship on the Company will be required), renders or will render
Executive unable to perform his essential job functions for a period longer than
four (4) months.  The determination of Executive’s Long-Term
Disability shall be made by Executive’s attending physician unless the Board
disagrees with such determination, in which case Executive’s Long-Term
Disability shall be determined by a majority of three physicians qualified to
practice medicine in the State of the Executive’s residence, one to be selected
by each of the Executive (or his authorized representative) and the Board and
the third to be selected by such two designated physicians;







(b)           is
effected, for any reason, by the Company, with or without cause, within one year
after a single party (other than Executive) obtains control of the Company,
whether by a purchase or purchases of its stock, by merger, by an acquisition of
the Company’s assets, or otherwise; or




(c)           is
effected by Executive and is attributable to the Company’s treatment of
Executive in the manner as referenced in paragraph 2(b) immediately
below.




2.           “Termination For
Cause.”  Subject to the notice requirement as provided in
paragraph 4 below, for purposes of Section IV.B.2 (and Section IV.C.1) above, a
termination for cause shall be a termination of Executive’s employment hereunder
made:




(a)           by
the Company, if Executive:




(i)            
materially breaches, or habitually neglects, the duties either that are required
to be performed under the terms specified herein or as delegated to Executive as
provided herein;




(ii)           
commits such acts of dishonesty, fraud, misrepresentation, or other acts of
moral turpitude as would prevent the effective performance of Executive’s
duties;




(iii)           is
indicted or convicted of any felony or any crime involving dishonesty, or any
crime which would adversely affect the reputation of the Company in a material
manner;




(iv)           intentionally
damages any property, of a substantial value or nature, of the
Company;




(v)           
exhibits conduct which demonstrates unfitness to serve;




(vi)           fails
to achieve milestones and tasks, referred to in Section III.B.2 above, including
but not limited to failure to perform, or continuing to neglect the performance
of duties assigned to Executive, which failure or neglect will significantly and
adversely affect the Company’s business or business prospects.




(b)           by
Executive, unless such termination by Executive is




(i)           
reasonably attributable to the Company’s treatment of Executive in a demeaning
nature or in a manner inconsistent with Executive’s duties referenced herein (in
which event, so attributable, the termination is deemed without cause, as
referenced in paragraph 1(c) immediately above), or




(ii)           subsequent
to a change of control of the Company, or




(iii)          subsequent
to a significant change in the responsibilities of the Executive, except as has
been already indicated to Executive in writing, or







D.           
Company
Actions.  All relevant determinations to be made by the Company
under paragraph C.2(a) above shall be made in the reasonable discretion of the
Board (or, if so delegated by said Board, by a committee of the Board), acting
in good faith, and, except as otherwise specified herein, shall be conclusive
and binding, but shall be subject to arbitration in accordance with Section V
below.  This Agreement is intended to comply with the requirements of
Internal Revenue Code Section 409A and the Board and the Board committee will
interpret its provisions accordingly.  Executive understands and
agrees that the Company makes no assurances with respect to the tax consequences
arising as a result of this Agreement and the payment of any tax liabilities or
related penalties arising out of this Agreement is solely and exclusively the
responsibility of Executive, without any expectation or understanding that the
Company will pay or reimburse Executive for such taxes or other
items.




E.           
Notice and
Remedy.  In the event that any reason for termination by the
Company under paragraph C.2(a) above, or by Executive under paragraph C.2(b)
above, may be cured by Executive, or the Company, as the case may be, then the
Company, or Executive, shall first give a written notice to the other (by mail,
or by email, or by fax, to the last known address of the recipient; said notice
being deemed given, if by mail, as of the earlier of four days after mailing or
as of the date when actually received, or, if by email or fax, when sent),
specifying the reason for termination and providing a period of 30 days to cure
the fault or reason specified.  Lacking such cure within said 30 days,
or if the notified party earlier refuses to effect the cure, the termination
shall then be deemed effective.  If such cure is so made, the
termination shall not then be deemed effective, but any later conduct of a
similar nature constituting a reason for termination shall allow the Company, or
Executive, as the case may be, the right to cause the termination effectiveness
without need for any further period of time to cure.  All
communications shall be sent to the address as set forth on the signature page
hereof, or to such other address as a party may designate by ten days’ advance
written notice to the other party hereto.




V.           ARBITRATION.




A.           
Arbitration.  Any
controversy or claim arising out of or relating to this Agreement, or the breach
thereof, or any of the rights, benefits or obligations resulting from its terms,
shall be settled by arbitration in San Francisco, California.
..  Except for the right of the Company and Executive to seek
injunctive relief in court, any controversy, claim or dispute of any type
arising out of or relating to Executive’s employment or the provisions of this
Agreement shall be resolved in accordance with this Section V of the Agreement,
regarding resolution of disputes, which will be the sole and exclusive procedure
for the resolution of any such disputes.  This Agreement shall be
enforced in accordance with the Federal Arbitration Act, the enforcement
provisions of which are incorporated by this reference.  Matters
subject to these provisions include, without limitation, claims or disputes
based on statute, contract, common law and tort and will include, for example,
matters pertaining to termination, discrimination, harassment, compensation and
benefits.  Matters to be resolved under these procedures also include
claims and disputes arising out of statutes such as the Fair Labor Standards
Act, Title VII of the Civil Rights Act, the Age Discrimination in Employment
Act, the California labor code, and the California Fair Employment and Housing
Act.  Nothing in this provision is intended to restrict Executive from
submitting any matter to an administrative agency with jurisdiction over such
matter.







The
Executive and the Company agree that any disputes related to or arising out of
the Executive’s employment with the Company will be determined by arbitration in
accordance with the then-current JAMS employment arbitration rules and
procedures, except as modified herein.  The arbitration will be
conducted by a sole neutral arbitrator who has had both training and experience
as an arbitrator of general employment and commercial matters and who is, and
for at least ten (10) years has been, a partner, a shareholder, or a member in a
law firm.  If the Company and Executive cannot agree on an arbitrator,
then the arbitrator will be selected by JAMS in accordance with Rule 12 of the
JAMS employment arbitration rules and procedures.  Reasonable
discovery will be permitted by both parties and the arbitrator may decide any
issue as to discovery.  The arbitrator may decide any issue as to
whether or as to the extent to which any dispute is subject to arbitration in
this Section V and the arbitrator may award any relief permitted by
law.  The arbitrator must render the award in writing, including an
explanation of the reasons for the award.  Judgment upon the award may
be entered by any court having jurisdiction of the matter, and the decision of
the arbitrator will be final and binding.  The parties hereto hereby
waive to the fullest extent permitted by law any rights to appeal or to review
of such award by any court.  The statute of limitations applicable to
the commencement of a lawsuit will apply to the commencement of an arbitration
under Section V of this Agreement.  At the request of any party, the
arbitrator, attorneys, parties to the arbitration, witnesses, experts, court
reporters or other persons present at the arbitration shall agree in writing to
maintain the strict confidentiality of the arbitration
proceedings.  The arbitrator’s fees will be paid in full by the
Company, unless Executive agrees in writing to pay some or all of such
fees.




B.           
Fees.  Unless
otherwise agreed, the prevailing party (if a prevailing party is determined to
exist by the arbitrator or judge) will be entitled to its costs and attorneys’
fees incurred in any arbitration or other proceeding relating to the
interpretation or enforcement of this Agreement.




C.           
Acknowledgement.  EXECUTIVE
HAS READ AND UNDERSTANDS THIS SECTION V, WHICH DISCUSSES
ARBITRATION.  EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT,
EXECUTIVE AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN
CONNECTION WITH THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION,
PERFORMANCE, BREACH OR TERMINATION THEREOF TO ARBITRATION, AND THAT THE
PROVISIONS SET FORTH IN THIS SECTION V CONSTITUTE A WAIVER OF EXECUTIVE’S RIGHT
TO A JURY TRIAL.







VI.           LEGAL
ADVICE.




Executive
acknowledges that an opportunity has been afforded to Executive to consult with
legal counsel with respect to this Agreement and that no individual representing
the Company has given legal advice with respect to this Agreement.




VII.          MISCELLANEOUS AND
CONSTRUCTION.




Except as
otherwise specifically provided herein, this Agreement:




A.          and
any benefits or obligations herein may not be assigned or delegated by Executive
(but may be so assigned or delegated by the Company);




B.           contains
the entire understandings of the parties as to its subject matter, and replaces
and supersedes any existing employment agreement and any and all contrary prior
understandings or agreements;




C.           may
be amended or modified only by a written amendment or modification signed by the
Company and Executive;




D.           is
made in, and shall be construed under the laws of, the State of
California;




E.           inures
to the benefit of, and is binding upon, the permitted successors, assigns,
distributees, personal representatives, heirs and other successors-in-interest
to and of the parties hereto;




F.           shall
not be interpreted by reference to any of the captions or headings of the
paragraphs herein, which captions or headings have been inserted for convenience
purposes only;




G.           shall
be fully effectuated in accordance with its tenor, effect and purposes by each
of the parties hereto by executing such further documents or taking such other
actions as may be reasonably requested by the other party hereto;
and




H.           shall
be interpreted, as to its remaining provisions, to be fully lawful and
operative, to the extent reasonably required to fulfill its principal tenor,
effect and purposes, in the event that any provision either is found by any
court of competent jurisdiction to be unlawful or inoperative or violates any
statutory or legal requirement, and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.




I.           may
be executed in more than one counterpart, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.




[Signature
Page Follows]







IN
WITNESS WHEREOF, the Company and Executive have executed this Agreement as of
the day and year first above written.




COMPANY:NOVABAY PHARMACEUTICALS, INC.By:
              /s/ Ramin
      NajafiName:
              Ramin
      "Ron" Najafi, Ph.D.Title:
              Chairman
      and CEOAddress:
              5980
      Horton Street, Suite 550Emeryville,
      CA 94608Fax
      No.:
              (510)
      740-3629E-mail:
              rnajafi@novabaypharma.comEXECUTIVE:ROY
      J. WU/s/
      Roy WuAddress:
              277
      Juanita Way,San
      Francisco, CA 94127Fax
      No.:E-mail: