Document:

Technology License Agreement-Mayo Foundation for Medical Education and Research

 CONFIDENTIAL TREATMENT REQUESTED 
 EXHIBIT 10.1 
 TECHNOLOGY LICENSE
AGREEMENT 
 This license agreement (“Agreement”) is by and between: 
 MAYO FOUNDATION FOR MEDICAL EDUCATION AND
RESEARCH, a Minnesota charitable corporation, located at 200 First Street SW, Rochester, Minnesota 55905-0001 (“MAYO”); and 
 NILE THERAPEUTICS, INC., a Delaware corporation, located at 115 Sansome St., Suite 310, San Francisco, California 94104 (“NILE”), each a “Party,”
and collectively, “Parties.” 
 WHEREAS, MAYO possesses certain intellectual property and know-how relating to a novel synthetic
natriuretic compound, named CU-NP, based on the ring structure of human CNP and both C- and N-termini of urodilatin (the “INVENTION”), which was invented at MAYO by Dr. John Burnett and Dr. Candace Lee; 
 WHEREAS, MAYO desires to make such intellectual property and know-how available for the development and commercialization of products for public use and
benefit; and 
 WHEREAS, MAYO is willing to grant, and NILE is willing to accept, an exclusive license under certain intellectual property
and know-how described herein for the purpose of developing and commercializing such products, as set forth below; and 
 WHEREAS, NILE will
be responsible for designing, developing, marketing, sublicensing and selling any products in accordance with the grant of rights hereunder. 
 NOW THEREFORE, in consideration of the foregoing and their mutual covenants set forth below, the Parties agree as follows: 
 Article 1 - Definitions 
 For purposes of this Agreement, each term defined in this Article will have the meaning specified for it below and
will be applicable both to the singular and plural forms: 
  

	1.01	“Affiliate” means: 

  

	(a)	with respect to MAYO, any corporation or other entity within the same “controlled group of 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

	 	 
corporations” as MAYO or its parent Mayo Foundation. For purposes of this definition, the term “controlled group of corporations” shall have
the same definition as Section 1563 of the Internal Revenue Code as of November 10, 1998, but shall include corporations or other entities that, if not a stock corporation, more than 50% of the board of directors or other governing body of
such corporation or other entity is controlled by a corporation within the controlled group of corporations of MAYO or Mayo Foundation. MAYO’s Affiliates include, but are not limited to: Mayo Clinic; Mayo Collaborative Services; Inc., Rochester
Methodist Hospital; Saint Mary’s Hospital; Mayo Clinic Rochester; Mayo Clinic Jacksonville; St. Luke’s Hospital Association; Mayo Clinic Arizona; and its Mayo Health System entities. 

  

	(b)	with respect to NILE means any corporation or other person controlling, controlled by or under common control with NILE. 

  

	(c)	The term “control” means the ability, directly or indirectly, to direct the management and policies of a corporation or person, whether through the ownership of voting
securities, by contract or otherwise. Control shall be deemed to exist in the case of the ownership, directly or indirectly, of 50% or more of the equity interests in any such corporation. 

 1.02 “Change of Control” shall mean (a) the acquisition of NILE by another person or entity by means of any transaction or series of related
transactions (including any stock transfer or series of transfers, reorganization, merger or consolidation) that results in the transfer of 50% or more of the outstanding voting power of NILE, or (b) a sale of all or substantially all of the
assets of NILE to which this Agreement relates. 
 1.03 “Commercialization” means all steps that must be taken to put a Product on the
market in the Territory after all necessary regulatory approvals have been obtained, including, without limitation, the manufacturing, marketing, distribution and/or sublicensing of such Product. 
  

	1.04	“Common Stock” shall mean the shares of common stock of the LICNESEE, par value $0.001 per share. 

 1.05 “Development” means the process of creating and assembling the data and files necessary to obtain regulatory approval for a Product including,
without limitation, all preclinical and clinical research and trials on such Product. 
  

	1.06	“Effective Date” means June 13,2008. 

 1.07
“FDA” means the Food and Drug Administration within the Department of Health and Human Services of the United States. 
  

	1.08	“Field” means all therapeutic indications. 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 1.09 “Government Rights” means rights, if any, of the United States Government to the Patents under
Public Law 96-517 and Public Law 98-620, as amended or augmented by other similar laws. 
 1.10 “Improvements” means any and all new
developments relating solely to Products made by or arising out of the laboratories of Drs. John Burnett and Candace Lee during the three (3) year period following the Effective Date of this Agreement, including improved methods of manufacture
and production techniques, and shall include, but not be limited to, additional therapeutic indications and developments intended to enhance the safety and efficacy of the Product; provided, however, that this provision shall remain in effect only
for so long as Drs. Burnett or Lee remain employed by MAYO, respectively. 
 1.11 “Know-How” means all technical information and data,
whether or not patented, presently known or learned, invented, or developed by Drs. John Burnett and Candace Lee that is useful in the Development and Commercialization of a Product and is disclosed to NILE, to the extent that such technical
information and data are helpful for the use or practice of the Patents or Know-How as permitted herein.  
 1.12 “License Quarter”
begins on the Effective Date, and thereafter begins on the first day of each January, April, July, and October during the Term 
 1.13
“License Year” begins on the Effective Date, and thereafter begins on the first day of each January during the Term. 
 1.14
“Net Sales” means the amount invoiced by NILE, its Affiliates or Sublicensee for sale of a Product in the Territory to a third party, less the following: 
  

	(a)	sales, tariff duties, excise or use taxes directly imposed and with reference to particular sales; 

  

	(b)	credits for defective or returned Products; 

  

	(c)	regular trade and discount allowances; and 

  

	(d)	bad debt deductions actually written off during the accounting period; 

 Leasing, lending, consigning or any other activity by means of which a third party acquires the right to possession or use of a Product will be considered a sale for the purpose of determining Net Sales. 
 1.15 “NDA” shall mean an application for approval to market a new drug filed with the FDA pursuant to 21 C.F.R. §314. 
 1.16 “Patent” or “Patents” means the issued United States and foreign patents and the pending applications set forth in Exhibit
A, together with any and all substitutions, extensions, divisionals, continuations, continuations-in-part (to the extent that the subject matter is disclosed and enabled in the parents), or foreign counterparts of such patent applications and
patents which issue thereon any where in the world, including reexamined and reissued patents. 
  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 1.17 “Phase II” means a human clinical trial, the principal purpose of which is to evaluate the
effectiveness of the Product for a particular indication in patients with the disease and to determine the common short-term side effects and risks associated with the Product as required in 21 C.F.R. §312. A Phase II study shall be deemed to
have been initiated when the first patient has been dosed with the drug substance. 
 1.18 “Phase III” means expanded controlled and
uncontrolled human clinical trials performed after Phase II evidence suggesting effectiveness of the Product has been obtained, and is intended to gather the additional information about effectiveness and safety that is needed to evaluate the
overall benefit-risk relationship of the Product and to provide an adequate basis for physician labeling, as required in 21 C.F.R. §312. A Phase III study shall also include any other human clinical trial intended to provide the substantial
evidence of efficacy necessary to support the filing of an approvable NDA (such as a combined Phase II/Phase III study, or any Phase III study in lieu of a Phase II study) (a “Pivotal Study”), whether or not such study is a traditional
Phase III study. A Phase III study shall be deemed to have been initiated when the first patient has been dosed with the drug substance. 
 1.19 “Product” means any method, service or product within the Field, the manufacture, use, offer for sale or sale of which would infringe the Patents. 
 1.10 “Reasonable Commercial Efforts” means efforts consistent with those used by comparable biotechnology companies in the United States in research and
development projects for therapeutic methods or compositions deemed to have commercial value comparable to the Product. 
 1.21
“Reports” means written summaries for each Product generally describing NILE’s efforts with respect to Development and Commercialization of the Product, including: 
  

	(a)	tests and research completed; 

  

	(b)	any filings made with any regulatory authorities; 

  

	(c)	any regulatory approvals received; 

  

	(d)	a response to any comments that MAYO has made to any earlier Report, including NILE’s rationale for rejecting any suggestion contained in such comments;

  

	(e)	reports or minutes of any formal meetings with regulatory authorities, whether convened in person or otherwise; and 

  

	(f)	any other major regulatory event, including but not limited to, placement of a “clinical hold” on a trial. 

 1.22 “Sublicensee” means any third party to whom NILE or a sublicensee of NILE conveys rights or the forbearance of suit under the
Patents and Know-How pursuant to Section 3.01. 
  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 1.23 “Successful Completion” of a Phase III clinical trial shall mean a clinical trial that yields data
that is sufficiently statistically significant to permit NILE to file a NDA. 
 1.24 “Valid Claim” means an issued claim of any unexpired
patent or claim of any pending patent application included among the Patents, which has not been held unenforceable, unpatentable or invalid by a decision of a court or governmental body of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal, which has not been rendered unenforceable through disclaimer or otherwise, and which has not been lost through an interference proceeding or abandoned. 
 1.25 “VWAP” is the volume weighted average price of a security that is a measure of the average price that a security has traded at over a given trading period. VWAP is calculated by adding the total
dollars traded for every transaction (price multiplied by number of shares traded) and then dividing by the total shares traded for the trading period for which the VWAP is being calculated. 
  

	1.26	“Territory” means world-wide. 

 Article
2 - Development and Commercialization 
 2.01 Agreements of Nile. NILE agrees to use its commercially reasonable efforts to implement a program of
Development and Commercialization of the Product as soon as practically possible. To achieve this goal, NILE agrees to: 
  

	(a)	conduct a reasonable research and commercial development program to develop a Product; 

  

	(b)	expend reasonable amounts towards the research and development of such Products; 

  

	(c)	diligently pursue worldwide regulatory approval of a Product; 

  

	(d)	commence marketing of a Product within [***] following regulatory approval in the United States. 

  

	(e)	comply with all applicable laws in performing its obligations under this Agreement, including in connection with obtaining the regulatory approvals; and 

  

	(f)	perform in good faith all of its obligations under this Agreement. 

 2.02 Development Plans and Reports. NILE agrees to provide MAYO with the Reports semi-annually, within 30
days of June 30th and December 31st ,
with the first report due by January 30, 2009. Such Reports shall be in sufficient detail for MAYO to among other things: 
  

	(a)	determine whether NILE is using Reasonable Commercial Efforts to pursue the regulatory approvals; 

  

	(b)	determine whether NILE is using Reasonable Commercial Efforts to develop a Development plan; and 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

	(c)	determine whether a Development plan, once developed and implemented, establishes that NILE is using its Reasonable Commercial Efforts for Commercialization of a Product.

 2.03 Consultation Regarding Reports. MAYO shall review the Reports and promptly inform NILE if MAYO reasonably believes that the
Development or Commercialization plans presented in the Reports are not adequate for a Product. NILE and MAYO will mutually confer, provided, however, notwithstanding anything to the contrary herein, NILE has the final decision-making authority.

 2.04 Receipt of Regulatory Approval. NILE shall notify MAYO within five (5) business days of receiving official notice of any regulatory
approval for any Product. 
 Article 3 - Grant of Rights 
 3.01 Grant of Rights. MAYO grants to NILE an exclusive, world-wide, royalty-bearing license, with the right to sublicense pursuant to Section 3.06, under the Patents and Improvements, and a nonexclusive
right under the Know-How to develop, make, have made, use, sell, import, offer to sell and commercialize Products within the Territory and within the Field. 
 3.02 Reservation of Rights. All rights herein are subject to: (a) the rights and obligations to and requirements of the U.S. government, if any have arisen or may arise, regarding the Patents, including as set
forth in 35 U.S.C. §§200 et al., 37 C.F.R. Part 401 et al. (“Bayh-Dole Act”); and (b) MAYO’s and its Affiliates’ reserved, irrevocable right to practice and have practiced the Patents in connection with MAYO’s
and its Affiliates’ educational, research and non-human clinical programs. NILE agrees to comply with the provisions of the Bayh-Dole Act, including promptly providing to MAYO with information requested to enable MAYO to meet its compliance
requirements and substantially manufacturing Product in the U.S. 
 3.03 All Other Rights Reserved. Except as granted in Section 3.01, or
as otherwise expressly granted herein, no other license is granted by MAYO under any intellectual property rights owned or controlled by MAYO, including any patents, know-how, copyrights, proprietary information, and trademarks. All such rights are
expressly reserved by MAYO. Except as provided herein, NILE acknowledges that in no event will this Agreement be construed as an assignment by MAYO to NILE of any intellectual property rights. 
 3.04 Confidentiality. During the Term, and for a period of five (5) years thereafter, each Party hereto agrees to keep confidential by not disclosing to any
third party any information (i) relating to this Agreement, including the terms and conditions thereof, or (ii) disclosed by one Party (the “Disclosing Party”) to the other (the “Receiving Party”). The Parties may use
this information solely as necessary for complying with the terms and conditions of this Agreement. The obligations of non-disclosure and non-use will not apply when and to the extent such information: 
  

	(a)	becomes part of the public domain through no action or fault of the Receiving Party; or 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

	(b)	was in the Receiving Party’s possession before disclosure by the Disclosing Party, as demonstrated by written records, and was not acquired, directly or indirectly, from the
Disclosing Party; or 

  

	(c)	was received by the Receiving Party from a third party having a legal right to transmit such information. 

 At MAYO’s request, NILE will cooperate fully with MAYO, except financially, in any legal actions taken by MAYO to protect its rights in the Patents and Know-how
disclosed hereunder. 
 For avoidance of doubt, any violation of the obligations stated in this Section 3.04 constitutes a material breach of this
Agreement. 
 3.05 Availability of Product to MAYO. Once a Product becomes commercially available, to the extent permitted by law and applicable
regulations, NILE will provide Products to MAYO and their Affiliates solely for it and their use for internal research and education programs in the Field at most favored nation pricing (i.e. no more than the lowest price available to
NILE’s commercial customers for the Products for use in the Field). 
 3.06 Sublicensee Actions. NILE may enter into sublicensing agreements
relating to the Patents, Improvements and Know-how. Nile agrees that any sublicense agreement shall (i) contain provisions at least as favorable to MAYO for the protection of MAYO’s rights and the limitation of MAYO’s liability
exposure as the terms of this Agreement, including without limitation with respect to name use, limitation of liability and indemnification, and development and commercialization obligations commensurate in scope as those set forth for Nile in this
Agreement, (ii) to the fullest extent applicable, contain all rights and obligations due to MAYO contained in this Agreement, and (iii) name MAYO as a third party beneficiary. NILE shall (i) be and remain responsible for the
performance by such Sublicensee with the terms of this Agreement, and any action by a Sublicensee that would, if conducted by NILE, be a breach of this Agreement, shall be deemed a breach of this Agreement by NILE, and (ii) ascertain,
calculate, audit and collect all royalties that become payable by such Sublicensee hereunder and take appropriate enforcement action against such Sublicensee for any failure to pay or to properly calculate payments. Any purported sublicense in
violation of this Section 3.06 shall be voidable. 
 Nile shall furnish to MAYO a true and complete copy of each sublicense agreement
and each amendment thereto, within thirty (30) days after the sublicense or amendment has been executed, which copy shall be the Confidential Information of Nile. 
  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 Article 4 - Consideration and Royalties 
 4.01 Initial Consideration. 
  

	(a)	Upon execution of this Agreement, NILE will pay MAYO an up-front payment of [***] as consideration for entering into the Agreement. This initial payment is nonrefundable and is not
an advance or creditable against any royalties otherwise due under this Agreement. 

  

	(b)	Upon the Effective Date, NILE shall issue to MAYO a number of shares of Common Stock having a fair market value as of the Effective Date equal to TWO HUNDRED FIFTY THOUSAND DOLLARS
(US $250,000) based on a 20-day VWAP. NILE shall deliver, or cause to be delivered, to MAYO a stock certificate, duly signed by appropriate officers of NILE and issued in MAYO’S name, representing all of the shares of Common Stock required to
be issued to MAYO under this Article 4. 

  

	(c)	By accepting the shares of Common Stock, MAYO hereby consents to the placement of a legend on any certificate or other document evidencing the shares of Common Stock that such
shares of Common Stock have not been registered under the Securities Act of 1933 or any state securities or “blue sky” laws and setting forth or referring to the restrictions on transferability and sale thereof contained in this Agreement.
MAYO is aware that NILE will make a notation in its appropriate records with respect to the restrictions on the transferability of such shares of Common Stock. The legend to be placed on each certificate shall be in form substantially similar to the
following: 

 “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933,
AS AMENDED (THE “ACT”) OR ANY STATE SECURITIES OR “BLUE SKY LAWS”, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.” 
  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

	4.02	Milestone Payments. NILE or its Sublicensee shall make the following one-time milestone payments to MAYO: 

  

			
	 Milestone
	  	Milestone Payment
	 Initiation of the first company sponsored Phase II clinical trial of a Product
	  	[***]
	 Initiation of the first U.S. company sponsored Phase III clinical trial of a Product
	  	[***]
	 Successful completion of a U.S. company sponsored Phase III clinical trial of a Product
	  	[***]
	 Acceptance by the FDA of the first New Drug Application (“NDA”) for a Product
	  	[***]
	 Approval by the FDA of the first NDA for a Product
	  	[***]
	 Approval by the FDA of an NDA for the first Product in each additional therapeutic indication
	  	[***]
	 Approval by the FDA of an NDA for each additional Product
	  	[***]

 4.03 Funding from Mayo’s Discovery-Translation Program. Dr. Burnett has applied for funding
through MAYO’s Discovery-Translation Program. In the event Dr. Burnett is awarded funding through this program, and the funding is used for the Development of a Product, MAYO shall be granted the equivalent dollar value in stock warrants
of NILE. The number of warrants will be calculated using the Black-Scholes option-pricing model and the following assumptions: the market price of NLTX on the Effective Date, the market yield on a 5-year constant maturity U.S. Treasury security on
the Effective Date, a 5 year contractual term, a dividend rate of 0%, and an 89% expected volatility. The warrants shall include a cashless exercise provision with language to be negotiated in good faith between the parties. 
 4.04 Earned Royalties. NILE or its Sublicensee will pay MAYO [***] of the Net Sales of Products in the Territory for use in the Field covered by at least one
Valid Claim. The Earned Royalties are payable as described in Section 5.01. 
 4.05 License Maintenance Royalties. In order for NILE to maintain
its exclusive license, NILE will pay MAYO a License Maintenance Royalty of [***] in License Year 1 and 2 and a License Maintenance Royalty of [***] in each License Year thereafter. Such License Maintenance Royalties are fully creditable against the
Milestone Payments described in Section 4.02 hereto. For the avoidance of doubt the License Milestone Royalty for License Year 1 shall be due on or before 13 June 2009. Failure to make License Maintenance Payments shall be considered a
material breach of this Agreement. 
 4.06 Interest. Any payment that is not made on or before the date when due under this Agreement shall accrue
interest thereon from and including such date and until but excluding the date of payment at the rate of one-half percent (0.5%) per month, or, if such rate is in excess of the rate then permitted by applicable laws, at the highest rate so
permitted. 
  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 4.07 Taxes. NILE is responsible for all applicable taxes (other than net income taxes), duties, import deposits,
assessments, and other governmental charges, however designated, that are now or hereafter will be imposed by any authority in or for the Territory, based on or relating to: 
  

	(a)	the Product or use of the Patents by NILE and/or NILE’s Sublicensees; or 

  

	(b)	the import of the Product into the Territory by NILE and/or NILE’s Sublicensees. 

 Notwithstanding the foregoing, NILE shall not be responsible for any taxes arising from transactions to which MAYO or any of their Affiliates may be parties exclusive of transactions with NILE. 
 4.08 No Deductions for Taxes. Except as otherwise stated herein, or unless otherwise agreed to in writing by MAYO and NILE, all payments to be made by NILE to
MAYO under this Agreement represent net amounts MAYO is entitled to receive, and shall not be subject to any deductions or offsets by NILE for any reason whatsoever. NILE, however, is not responsible for any payments, including income tax, required
to be paid by MAYO on funds received from or on behalf of NILE. 
 4.09 U.S. Currency. All payments to MAYO under this Agreement will be made by draft
drawn on a United States bank, and payable in United States dollars. 
 4.10 Overdue Payments. If overdue, the payments due under this
Agreement shall bear interest until paid at a per annum rate 2% above the prime rate in effect at Citibank on the due date and MAYO shall be entitled to recover, in addition to all other remedies, reasonable attorneys’ fees and costs related to
the administration or enforcement of this Agreement, including collection of payments, following such failure to pay. The acceptance of any payment, including of such interest shall not foreclose MAYO from exercising any other right or seeking any
other remedy that it may have as a consequence of the failure of NILE to make any payment when due. 
 4.11 Material Breach. It shall be a material
breach of this Agreement if NILE shall fail to make any payment pursuant to Article 4 of this Agreement when such payment is due or by the end of any applicable cure period. 
 Article 5 - Accounting and Reports 
 5.01 Royalty Reports and Payments. NILE will, after
Commercialization of at least one Product, deliver to MAYO on or before 1 June, 1 September, 1 December and 1 March a written report for the previous License Quarter stating, for each Product and for each country in the Territory
in which there are Net Sales: 
  

	(a)	the number of Products sold during the period covered by the written report; 

  

	(b)	a description of all deductions from gross receipts applied to determine Net Sales; 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

	(c)	amount of royalty due thereupon for the period covered by the written report; and 

  

	(d)	exchange rates used to calculate the royalties due. 

 Each such report
shall be accompanied by the royalty payment due for such License Quarter, in accordance with this Article 5. 
 5.02 Audit Rights. NILE agrees to
maintain the Records and to require any permitted Sublicensees to maintain the Records. “Records” mean complete and accurate records showing clearly all transactions that are relevant to any sales, costs, expenses and payments under this
Agreement, to be kept in a manner consistent with generally accepted accounting principles and standard operating procedures. MAYO shall have the right, at its expense, through a certified public accountant or like person reasonably acceptable to
NILE, to examine the records of NILE and its Sublicensees during regular business hours before the Termination or expiration of this Agreement and for three (3) years thereafter, provided that such examination shall not take place more often
than once a year and shall be limited to a report on the accuracy of royalty statements and payments. If the audit report for any License Year discloses an underpayment discrepancy in royalties owed by NILE and royalties paid by NILE to MAYO that
exceeds [***] of total Net Sales or Sublicense Revenue made until the date of completion of the audit, NILE shall pay the reasonable expense of the audit and pay to MAYO the entire amount of the discrepancy plus interest within thirty (30) days
from the date upon which MAYO notified NILE of the discrepancy. Interest shall be computed at the rate which is the prime rate of Citibank N.A. (N.Y.) in effect at 9:00 a.m. on the day that MAYO notifies NILE of the discrepancy. Discrepancies in
royalty payments for a License Year identified by the audit report amounting to less than [***] shall be paid by the end of the License Quarter in which the audit was made. 
 Article 6 – Representations, Warranties and Indemnification 
 6.01
Representations and Warranties. MAYO hereby represents and warrants to the best of its counsel’s knowledge the following: 
  

	(a)	MAYO has the full right and power to perform the obligations and grant the License set forth in this Agreement; 

  

	(b)	There are no outstanding agreements, assignments or encumbrances in existence inconsistent with the provisions of this Agreement. 

  

	(c)	Subject to Section 3.02, MAYO owns or possesses all right, title and interest in and to the Patents free and clear of all liens, charges, encumbrances or other restrictions or
limitations of any kind whatsoever. 

  

	(d)	Subject to Section 3.02, there are no licenses, options, restriction, liens, rights of third parties, disputes, royalty obligations, proceedings or claims relating to,
affecting, or limiting its rights or the rights of NILE under this Agreement, which imposes obligations upon MAYO or gives any rights to MAYO which, in either case, would adversely affect the rights of NILE or the obligations of MAYO under this
Agreement. 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

	(e)	There is no claim, pending or threatened, of infringement, interference or invalidity regarding, any part or all of the Patents and their use as contemplated in the underlying
patent applications as presently drafted or as contemplated under this Agreement. 

  

	(f)	MAYO has provided a copy of all pending patents and applications, filed as of the Effective Date, for which Dr. Burnett and Dr. Lee are co- inventors .

  

	6.02	No Warranties. Notwithstanding the foregoing, nothing in this Agreement will be construed as: 

  

	(a)	a warranty or representation by MAYO as to the validity or scope of any of the Patents; or 

  

	(b)	an obligation to bring or to prosecute actions against third parties for infringement of the Patents; or 

  

	(c)	a warranty or representation that the manufacture, use, sale, offer for sale or importation of any Product or the use or practice of any of the Patents are free from infringement or
misappropriation of a third party’s intellectual property rights. 

 6.03 Disclaimer. MAYO HAS NOT MADE AND PRESENTLY MAKES NO
PROMISES, GUARANTEES, REPRESENTATIONS OR WARRANTIES OF ANY NATURE, DIRECTLY OR INDIRECTLY, EXPRESS OR IMPLIED, REGARDING THE MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR NON-INFRINGEMENT FOR THE PRODUCTS OR PATENTS. THE KNOW-HOW AND PATENTS
PROVIDED OR LICENSED UNDER THIS AGREEMENT ARE PROVIDED “AS IS,” “WITH ALL FAULTS,” AND “WITH ALL DEFECTS”.  
 NILE is
solely responsible for determining whether the Patents and Know-How provided or licensed hereunder have applicability or utility in NILE’s manufacturing and design activities. NILE assumes all risk and liability in connection with such
determination. 
 6.04 Indemnification by NILE. NILE will defend, indemnify, and hold harmless MAYO and MAYO’s Affiliates from any and all
claims, actions, demands, judgments, losses, costs, expenses, damages and liabilities (including but not limited to reasonable attorneys fees and other out-of-pocket expenses incurred in litigation) (collectively, “Claims”), regardless of
the legal theory asserted, arising out of or connected with: (a) use by NILE of Patents or Know-How furnished or licensed under this Agreement; (b) development, design, manufacture, distribution, use, sale, or other disposition of
products, including Products, by NILE or its transferees or Mayo and/or it Affiliates; and (c) any clinical trial funded or conducted by NILE, unless such Claims are judicially determined to have arisen out of the gross negligence or willful
misconduct of MAYO or its Affiliates. As used herein, MAYO and its Affiliates include the trustees, officers, agents, and employees of MAYO and its Affiliates. NILE will, during the Term, carry occurrence-based liability insurance, including
products 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 
liability and contractual liability, in an amount and for a time period sufficient to cover the liability assumed by NILE hereunder, such amount being at
least [***], provided that a lesser amount shall be acceptable to MAYO until such time as the Product enters into human clinical trials. In addition, such policy will name MAYO as an additional-named insured party. 
 6.05 Additional Waivers. IN NO EVENT WILL MAYO’S LIABILITY OF ANY KIND INCLUDE ANY SPECIAL, INDIRECT, INCIDENTAL, OR FUTURE DAMAGES, EVEN IF MAYO HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO CASE WILL MAYO’S LIABILITY OF ANY KIND EXCEED THE TOTAL AMOUNTS WHICH HAVE ACTUALLY BEEN PAID TO MAYO BY NILE AS OF THE DATE OF FILING OF THE ACTION AGAINST MAYO WHICH RESULTS IN THE SETTLEMENT
OR AWARD OF DAMAGES. 
 6.06 Prohibition Against Inconsistent Statements. NILE shall not make any statements, representations or warranties, or
accept any liabilities or responsibilities whatsoever which are inconsistent with any disclaimer or limitation included in this section or any other provision of this Agreement. NILE shall not settle any matter that will incur liability for MAYO or
require MAYO to make any admission of liability without MAYO’s prior written consent. 
 Article 7 - Term and Termination

 7.01 Term. Unless sooner terminated, this Agreement shall continue in full force and effect until the later of (a) the expiration of the
last to expire Valid Claim contained in the Patents and (b) the 20th anniversary of this Agreement. 
 7.02 Material Breach. MAYO shall be
entitled to terminate this Agreement at any time based upon material breach if NILE has failed to cure such material breach within ninety (90) days of receipt of notice by NILE from MAYO that NILE is in breach. 
 7.03 Termination for Other than Material Breach. NILE may terminate the Agreement without cause upon ninety (90) days prior written notice. 
 7.04 Termination for Cessation of Development. NILE agrees to notify MAYO within thirty (30) days if NILE determines that all Development efforts have been
terminated for all Products. Upon receipt of such notification, MAYO may terminate this Agreement and the licenses granted hereunder. 
 7.05
Termination for Challenge. MAYO may terminate this Agreement by transmitting a notice of termination to NILE in the event NILE challenges the validity or enforceability of any of the Patent Rights in any manner. 
  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 7.06 Insolvency of Company. MAYO may terminate this Agreement by transmitting a notice of termination to NILE in
the event NILE ceases conducting business in the normal course, becomes insolvent or bankrupt, makes a general assignment for the benefit of creditors, admits in writing its inability to pay its debts as they are due, permits the appointment of a
receiver for its business or assets, or avails itself of or becomes subject to any proceeding under any statute of any governing authority relating to insolvency or the protection of rights of creditors. 
 7.07 Effect of Termination. Upon termination of this Agreement, all rights granted herein will immediately revert to MAYO with no further notice or action
required on the MAYO’s behalf. NILE agrees to negotiate in good faith for an agreement, which shall be on commercially reasonable terms, under which NILE would provide and grant to MAYO the rights to use full and complete copies of all
toxicity, efficacy, and other data generated solely by NILE (including by contractors or agents on their behalf, specifically excluding MAYO) in the course of NILE’s efforts to develop Products or obtain governmental approval for the sale of
Products, for use in connection with the development and commercialization of Products. 
 7.08 Survival. The following obligations survive the
expiration or termination of this Agreement: 
  

	(a)	NILE’s obligation to supply reports covering the time period up to the date of termination or expiration; 

  

	(b)	MAYO’ right to receive payments, fees, and royalties accrued or accruable from payment at the time of any termination or expiration; 

  

	(c)	NILE’s obligation to maintain records, and MAYO’ right to have those records inspected; 

  

	(d)	any cause of action or claim of MAYO, accrued or to accrue, because of any action or omission by NILE; 

  

	(e)	NILE’s obligations stated in Section 2.03 for data developed prior to termination or expiration, Sections 3.04 and 3.06; the applicable sections of Article 6; Sections
7.07, 7.09 and 7.010; and Article 10; and 

  

	(f)	MAYO’ obligations stated in Section 3.04 and 10.01, and the applicable sections of Articles 6 and 10. 

 7.09 Inventory. NILE shall notify MAYO within thirty (30) days of the effective date of termination of this Agreement the amounts, if any, of Product that
NILE, its Sublicensees and distributors then have in inventory in each country. At MAYO’ election, NILE, its Sublicensees and distributors may sell the Product in that country if NILE pays royalties thereon in accordance with Sections 4.04 and
5.01. In the event that MAYO does not permit the sale of the inventory, MAYO will direct NILE to return the inventory to MAYO or to destroy the inventory, at the cost of MAYO. 
 7.10 Return of Confidential Information. Within thirty (30) days of the effective date of termination of this Agreement, each of the Parties shall return all of the other Party’s Confidential
Information, including all copies thereof; provided, however, that each Party shall be entitled to retain one copy of all such Confidential Information in its legal department so that any continuing obligations of confidentiality may be determined.

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 Article 8 - Patent Filing, Prosecution and Maintenance 
 8.01 Patent Filing, Prosecution and Maintenance. Following execution of this Agreement, NILE shall be responsible for the prosecution and maintenance of all
Patents and Patent applications, at NILE’s expense, using counsel reasonably acceptable to MAYO, and shall keep MAYO informed of prosecution 
 8.02 Patent Term Extension. MAYO will have the sole right to decide on which Patent(s) to obtain a patent term extension; provided that MAYO will consider NILE’s input on the matter. NILE agrees to do all things which MAYO
determines are necessary to ensure the timely and complete filing and prosecution of any application for a patent term extension with the United States Patent and Trademark Office for any Product. NILE’s duties shall include, but not be limited
to, providing MAYO with any information and notifications reasonably necessary for obtaining a patent term extension. 
 Article 9 - Patent
Rights Enforcement 
 9.01 Third Party Litigation. In the event a third party institutes a suit against NILE for patent infringement involving a
Product, NILE will promptly inform MAYO and keep MAYO regularly informed of the proceedings. In the event the third party sues or joins MAYO, MAYO will have the right to control the defense of the suit. Each Party will bear its own costs of the suit
and any recovery will be shared equally by the Parties. 
 9.02 Infringement by Third Party. NILE and MAYO will promptly inform the other Party in
writing of any alleged infringement of any Patent and provide the other Party with available evidence of such infringement, and MAYO and NILE will have the right to institute an action for infringement of the Patents consistent with the following:

  

	(a)	If MAYO and NILE agree to institute suit jointly, then the suit will be brought in the names of both Parties. NILE will exercise control over such action, provided, however, that
MAYO may, if it so desires, be represented by counsel of its own selection, and at its own expense. 

  

	(b)	In the absence of an agreement to institute a suit jointly, MAYO may institute suit and, at its option, join NILE as a plaintiff. MAYO will bear the entire cost of such litigation,
including attorneys’ fees. NILE will cooperate reasonably with MAYO, except financially, in such litigation. MAYO will not settle or enter into a voluntary disposition of the action without NILE’s prior written consent.

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

	(c)	In the absence of an agreement to institute a suit jointly, and if MAYO determines not to institute a suit, as provided in paragraph (b) of this Section 9.02, then NILE
may institute suit and, at its option, join MAYO if MAYO is a necessary party to the litigation. NILE will bear the entire cost of such litigation, including attorneys’ fees. MAYO will cooperate reasonably with NILE, except financially, in such
litigation. NILE will not settle or enter into a voluntary disposition of the action without MAYO’s prior written consent. 

  

	(d)	Absent an agreement to the contrary, any costs under (a) above will be borne equally by the Parties and any recoveries will be shared in proportion to the economic damages
suffered by each Party. Otherwise, each Party will bear its own expenses and any recovery will be applied as follows: 

  

	 	(i)	first, to reimburse the Party bringing the action; 

  

	 	(ii)	second, to reimburse the expenses of the other Party in connection with such action; and 

  

	 	(iii)	third, [***] ([***]%) to MAYO and [***] ([***]%) to NILE. 

  

	(e)	If either Party institutes a suit under this Section 9.02 and then decides to abandon the suit, it will first provide timely written notice to the other Party of its intention
to abandon the suit, and the other Party, if it wishes, may continue prosecution of such suit, provided, however, that the sharing of expenses and of any recovery in such suit will be agreed-upon separately by the Parties. 

9.03 Patent Marking. To the extent commercially feasible and customary in the trade, NILE will mark all Products that are manufactured or sold under this
Agreement with the number of each issued patent within the Patents that cover such Product(s). Any such marking will be in conformance with the patent laws and other laws of the country of manufacture or sale. 
 Article 10 - General Provisions 
 10.01 Name Use. This Agreement does not convey any right to use any of the other Party’s names or
logos other than where required by law, rule or regulation. Neither Party may use publicly for publicity, promotion, or otherwise, any logo, name, trade name, service mark or trademark of the other Party or its Affiliates, or any simulation,
abbreviation or adaptation of the same, or the name of any of the other Party’s employee or agent without such other Party’s prior, written, express consent other than where required by law, rule or regulation. MAYO’s marks include,
but are not limited to, the terms “MAYO®” and “MAYO CLINIC®.” Any violation of this Section 10.01
constitutes a material breach of this Agreement. 
 10.02 Assignment. Nile may assign its rights and obligations under this Agreement to a third party
in conjunction with a Change of Control without Mayo’s prior written consent; provided that Nile shall remain responsible for the performance of its assignee, the assignee agrees to assume and be 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 
bound by the provisions of this Agreement in writing and Nile promptly notifies Mayo of such assignment. Mayo’s written consent, which shall not be
unreasonably withheld, shall be required prior to any other assignment of Nile’s rights or obligations hereunder. Any other purported assignment is void. 
 10.03 Waiver. The failure of a Party to complain of any default by another Party or to enforce any of such Party’s rights, no matter how long such failure may continue, will not constitute a waiver of the Party’s rights
under this Agreement. The waiver by a Party of any breach of any provision of this Agreement shall not be construed as a waiver of any subsequent breach of the same or any other provision. No part of this Agreement may be waived except by the
further written agreement of the Parties. 
 10.04 Governing Law and Jurisdiction. This Agreement is made and performed in Minnesota. It is governed
by Minnesota law, but specifically not including Article 2 of the Uniform Commercial Code as enacted in Minnesota. This is not an Agreement for the sale of goods. In addition, no Minnesota conflicts-of-law or choice-of-laws provisions apply to this
Agreement. To the extent the substantive and procedural law of the United States would apply to this Agreement, it supersedes the application of Minnesota law. The exclusive fora for actions between the Parties in connection with this Agreement are
the State District Court sitting in Olmsted County, Minnesota, or the United States Court for the District of Minnesota. NILE agrees unconditionally that it is personally subject to the jurisdiction of such court.  
 10.05 Headings. The headings of articles and sections used in this document are for convenience of reference only, and shall not affect the meaning or
interpretation of this Agreement. 
 10.06 Notices. All notices and other business communications between the Parties related to this Agreement shall
be in writing, sent by certified mail, addressed as follows: 
 If to MAYO: 
 Mayo Foundation for Medical Education and Research 
 200 First Street SW 
 Rochester, Minnesota 55905-0001 
  

							
	 Attn:
	  	Susan L. Stoddard, Ph.D.	  	COPY TO:
		  	Office of Intellectual Property	  	Mayo Legal
		  	Mayo Clinic Health Solutions	  	Attn: General Counsel
	 Telephone:
	  	507-293-3900	  	Telephone:	  	507-284-2650
	 Facsimile:
	  	507-284-5410	  	Facsimile:	  	507-284-0929
	 Email:sstoddard@mayo.edu and
	  		  	
	 patents@mayo.edu
	  		  	

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 If to NILE: 
 Nile Therapeutics, Inc. 
  

			
	 115  Sansome St., Suite #310

	 San  Francisco, CA 94104

		
	 Attn:
	  	Daron Evans
	 Telephone:
	  	415-875-7880
	 Facsimile:
	  	415-875-7075
	 Email:
	  	devans@nilethera.com

 Notices sent by certified mail shall be deemed delivered on the third day following the date of mailing. A Party
may change its address or facsimile number by giving written notice in compliance with this section. 
 10.07 Limitation of Rights Created. This
Agreement is intended only to benefit the Parties hereto and is not intended to confer upon any other person any rights or remedies hereunder. 
 10.08
Independent Contractors. It is mutually understood and agreed that the relationship between the Parties is that of independent contractors. No Party is the agent, employee, or servant of the other. Except as specifically set forth herein, no
Party shall have or exercise any control or direction over the methods by which the other Party performs work or obligations under this Agreement. Further, nothing in this Agreement is intended to create any partnership, joint venture, or lease,
expressly or by implication, between the Parties. 
 10.09 Entire Agreement. This Agreement constitutes the final, complete and exclusive agreement
between the Parties with respect to its subject matter and supersedes all past and contemporaneous agreements, promises, and understandings, whether oral or written, between the Parties. 
 10.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties, their heirs, legal representatives, successors and assigns. 
 10.11 Severability. In the event any provision of this Agreement is held to be invalid or unenforceable, the remainder of this Agreement shall remain in full
force and effect as if the invalid or unenforceable provision had never been a part of the Agreement. 
 10.12 Amendments. This Agreement may not be
amended or modified except by a writing signed by the Parties and identified as an amendment to this Agreement. 
 10.13 Construction. The Parties
agree to all of the terms of this Agreement. The Parties execute this Agreement only after reviewing it thoroughly. That one Party or another may have drafted all or a part of this Agreement will not cause this Agreement to be read more strictly
against the drafting Party. This Agreement, and any changes to it, will be interpreted on the basis that the Parties contributed equally to the drafting of all of its parts. 
  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

	10.14	Registration Of Licenses. NILE will register and give required notice concerning this Agreement, at its expense, in each country in the Territory where an obligation under
law exists to so register or give notice. 

 10.15 Export Control. MAYO is subject to U.S. laws and regulations controlling the export
of technical data, computer software, laboratory prototypes, and other commodities that may require a license from the applicable agency of the United States government and/or may require written assurances by NILE that it will not export data or
commodities to certain foreign countries without prior approval of such agency. MAYO neither represents that a license is required, nor that, if required, it will be issued. 
 10.16 Nondisclosure. Except as permitted herein, neither Party will disclose any of the terms of this Agreement without the express, prior, written consent of the other Party, or unless required by law or a
regulatory authority. 
 10.17 Counterparts. This Agreement shall become binding as of the Effective Date when any one or more counterparts
hereof, individually or taken together, shall bear the signatures of each of the Parties hereto. This Agreement may be executed in any number of counterparts, each of which shall be an original as against any Party whose signature appears thereon
but all of which together shall constitute but one and the same instrument. 
 [Remainder of page intentionally left blank] 

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 IN WITNESS WHEREOF, MAYO and NILE have caused this Agreement to be signed as of the Effective Date by their
respective representatives. 
 MAYO FOUNDATION FOR MEDICAL EDUCATION
AND RESEARCH: 
  

					
	/s/ Steven VanNurden	 		 	June 17, 2008
	NAME: STEVEN P. VANNURDEN	 		 	DATE
	TITLE: ASSISTANT TREASURER	 		 	
			
	READ, UNDERSTOOD AND AGREED:	 		 	
			
	/s/ John Burnett	 		 	June 17, 2008
	JOHN C. BURNETT, M.D.	 		 	DATE
			
	/s/ Candace Lee	 		 	June 17, 2008
	CANDACE LEE, M.D., PH.D.	 		 	DATE
			
	NILE THERAPEUTICS, INC:	 		 	
			
	/s/ Peter Strumph	 		 	June 13, 2008
	NAME:	 		 	DATE
	TITLE:	 		 	

  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted. 

 EXHIBIT A 
 PATENTS 
 US Patent Application Number 60951117 filed on 20 July 2007; 
  

	*	Confidential treatment has been requested for certain portions of this Exhibit. The confidential portions of this Exhibit have been omitted and filed separately with the
Securities and Exchange Commission. Such portions have been marked with “***” at the exact place where material has been omitted.2007 Omnibus Incentive Plan

  
  
 Exhibit 10.1 
  
 NOVABAY PHARMACEUTICALS, INC. 
 2007 OMNIBUS INCENTIVE PLAN 
 (as
amended and restated on April 16, 2008) 
  
  
  
  

 Table of Contents 
  

					
			
	Section 1.	  	 Purpose
	  	1
			
	Section 2.	  	 Definitions
	  	1
			
	Section 3.	  	 Administration
	  	4
	(a)  	  	 Power and Authority of the Committee
	  	4
	(b)  	  	 Power and Authority of the Board
	  	5
	(c)  	  	 Delegation of Duties
	  	5
			
	Section 4.	  	 Shares Available for Awards
	  	5
	(a)  	  	 Shares Available
	  	5
	(b)  	  	 Accounting for Awards
	  	6
	(c)  	  	 Adjustments
	  	6
	(d)  	  	 Section 162(m) Award Limitations Under the Plan
	  	6
			
	Section 5.	  	 Eligibility
	  	6
			
	Section 6.	  	 Awards
	  	7
	(a)  	  	 Options
	  	7
	(b)  	  	 Stock Appreciation Rights
	  	8
	(c)  	  	 Restricted Stock and Restricted Stock Units
	  	8
	(d)  	  	 Performance Awards
	  	8
	(e)  	  	 Dividend Equivalents
	  	9
	(f)  	  	 Other Stock Grants
	  	9
	(g)  	  	 Other Stock-Based Awards
	  	9
	(h)  	  	 General
	  	9
			
	Section 7.	  	 Amendment and Termination; Adjustments
	  	12
	(a)  	  	 Amendments to the Plan
	  	12
	(b)  	  	 Amendments to Awards
	  	13
	(c)  	  	 Correction of Defects, Omissions and Inconsistencies
	  	13
			
	Section 8.	  	 Income Tax Withholding
	  	13
			
	Section 9.	  	 General Provisions
	  	14
	(a)  	  	 No Rights to Awards
	  	14
	(b)  	  	 Award Agreements
	  	14
	(c)  	  	 Plan Provisions Control
	  	14
	(d)  	  	 No Rights of Shareholders
	  	14
	(e)  	  	 No Limit on Other Compensation Arrangements
	  	14
	(f)  	  	 No Right to Employment
	  	14
	(g)  	  	 Governing Law
	  	15
	(h)  	  	 Severability
	  	15

  

 ii 

					
	(i)  	  	 No Trust or Fund Created
	  	15
	(j)  	  	 Other Benefits
	  	15
	(k)  	  	 No Fractional Shares
	  	15
	(l)  	  	 Headings
	  	15
	(m)  	  	 Section 16 Compliance; Section 162(m) Administration
	  	15
	(n)  	  	 Conditions Precedent to Issuance of Shares
	  	16
			
	Section 10.	  	 Effective Date of the Plan
	  	16
			
	Section 11.	  	 Term of the Plan
	  	16

 iii 

 NOVABAY PHARMACEUTICALS, INC. 
 2007 OMNIBUS INCENTIVE PLAN 
 (as amended and restated on April 16, 2008)

 Section 1. Purpose 
 The
purpose of the Plan is to promote the interests of the Company and its shareholders by aiding the Company in attracting and retaining employees, officers, consultants, independent contractors and directors capable of assuring the future success of
the Company, to offer such persons incentives to continue in the Company’s employ or service and to afford such persons an opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Company.

 Section 2. Definitions 
 As used
in the Plan, the following terms shall have the meanings set forth below: 
 (a) “Affiliate” shall mean (i) any entity
that, directly or indirectly through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee. 
 (b) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Award, Dividend
Equivalent, Other Stock Grant or Other Stock-Based Award granted under the Plan. 
 (c) “Award Agreement” shall mean any
written agreement, contract or other instrument or document evidencing an Award granted under the Plan. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent
with the Plan) determined by the Committee. 
 (d) “Board” shall mean the Board of Directors of the Company. 
 (e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder.

 (f) “Committee” shall mean a committee of Directors designated by the Board to administer the Plan, which shall initially
be the Company’s compensation committee. The Committee shall be comprised of not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under Rule 16b-3 and Section 162(m) of the
Code, and each member of the Committee shall be a “Non-Employee Director” and an “Outside Director.” 
 (g)
“Company” shall mean NovaBay Pharmaceuticals, Inc., a California corporation, and any successor corporation. 
 (h)
“Covered Employee” means an employee who is, or could be, a “covered employee” within the meaning of Section 162(m) of the Code. 
  

 1 

 (i) “Director” shall mean a member of the Board, including any Non-Employee Director.

 (j) “Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan. 
 (k) “Eligible Person” shall mean any employee, officer, consultant, independent contractor or director providing services to the Company
or any Affiliate who the Committee determines to be an Eligible Person. An Eligible Person must be a natural person. 
 (l) “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended. 
 (m) “Fair Market Value” shall mean, with
respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. Notwithstanding the
foregoing and unless otherwise determined by the Committee, the Fair Market Value of a Share as of a given date shall be, if the Shares are then listed on the American Stock Exchange, the closing price of one Share as reported on the American
Stock Exchange on such date or, if the American Stock Exchange is not open for trading on such date, on the most recent preceding date when it is open for trading. 
 (n) “Incentive Stock Option” shall mean an option granted under Section 6(a) of the Plan that is intended to qualify as an “incentive stock option” in accordance with the terms of
Section 422 of the Code or any successor provision. 
 (o) “Insider” shall mean (i) an insider (as defined in
Section 1 of the Securities Act (Ontario)), except that a person who falls within that definition solely by virtue of being a director or senior officer of a subsidiary or an affiliate (as defined in Sections 1(2) and 1(4), respectively, of the
Securities Act (Ontario)) of the Company shall not be an insider for purposes hereof, unless such director or senior officer: (1) in the ordinary course receives or has access to information as to material facts or material changes concerning
the Company before the material facts or material changes are generally disclosed, (2) is a director or senior officer of a major subsidiary (as defined in National Instrument 55-101—Insider Reporting Exemptions) or (3) is an insider
of the Company in a capacity other than as a director or senior officer of the subsidiary or affiliate of the Company; and (ii) an associate (as defined in Section 1(1) of the Securities Act (Ontario)) or affiliate of any person who is an
insider by virtue of the preceding clause (i). 
 (p) “Non-Employee Director” shall mean any Director who is not also an
employee of the Company or an Affiliate within the meaning of Rule 16b-3 (which term “Non-Employee Director” is defined in this paragraph for purposes of the definition of “Committee” only and is not intended to define such
term as used elsewhere in the Plan). 
 (q) “Non-Qualified Stock Option” shall mean an option granted under
Section 6(a) of the Plan that is not an Incentive Stock Option. 
 (r) “Option” shall mean an Incentive Stock Option or
a Non-Qualified Stock Option. 
  

 2 

 (s) “Other Stock Grant” shall mean any right granted under Section 6(f) of the
Plan. 
 (t) “Other Stock-Based Award” shall mean any right granted under Section 6(g) of the Plan. 
 (u) “Outside Director” shall mean any Director who is an “outside director” within the meaning of Section 162(m) of the
Code. 
 (v) “Participant” shall mean an Eligible Person designated to be granted an Award under the Plan. 
 (w) “Performance Award” shall mean any right granted under Section 6(d) of the Plan. 
 (x) “Performance Goal” shall mean one or more of the following performance goals, either individually, alternatively or in any
combination, applied on a corporate, subsidiary or business unit basis: revenue, cash flow, gross profit, earnings before interest and taxes, earnings before interest, taxes, depreciation and amortization and net earnings, earnings per share,
margins (including one or more of gross, operating and net income margins), returns (including one or more of return on assets, equity, investment, capital and revenue and total shareholder return), stock price, economic value added, working
capital, market share, cost reductions, workforce satisfaction and diversity goals, employee retention, customer satisfaction, completion of key projects and strategic plan development and implementation. Such goals may reflect absolute entity or
business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria. Pursuant to rules and conditions adopted by the Committee on or before the 90th day of
the applicable performance period for which Performance Goals are established, the Committee may appropriately adjust any evaluation of performance under such goals to exclude the effect of certain events, including any of the following events:
asset write-downs; litigation or claim judgments or settlements; changes in tax law, accounting principles or other such laws or provisions affecting reported results; severance, contract termination and other costs related to exiting certain
business activities; and gains or losses from the disposition of businesses or assets or from the early extinguishment of debt. 
 (y)
“Permanent Disability” shall mean the inability of Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or has
lasted or can be expected to last for a continuous period of twelve months or more. 
 (z) “Person” shall mean any
individual or entity, including a corporation, partnership, limited liability company, association, joint venture or trust. 
 (aa)
“Plan” shall mean the NovaBay Pharmaceuticals, Inc. 2007 Omnibus Incentive Plan, as amended from time to time, the provisions of which are set forth herein. 
 (bb) “Qualified Performance Based Award” shall have the meaning set forth in Section 6(d) of the Plan. 
  

 3 

 (cc) “Restricted Stock” shall mean any Share granted under Section 6(c) of the
Plan. 
 (dd) “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right
to receive a Share (or evidencing the right to receive a cash payment equal to the Fair Market Value of a Share if explicitly so provided in the Award Agreement) at some future date. 
 (ee) “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act, or any
successor rule or regulation. 
 (ff) “Section 162(m)” shall mean Section 162(m) of the Code and the applicable
Treasury Regulations promulgated thereunder. 
 (gg) “Securities Act” shall mean the Securities Act of 1933, as amended.

 (hh) “Service” shall mean the Participant’s performance of services for the Company (or any Affiliate) in the
capacity of an employee, officer, consultant, independent contractor or director. 
 (ii) “Share” or
“Shares” shall mean a share or shares of common stock, $0.01 par value per share, of the Company or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the
Plan. 
 (jj) “Stock Appreciation Right” shall mean any right granted under Section 6(b) of the Plan. 
 Section 3. Administration 
 (a) Power and
Authority of the Committee. The Plan shall be administered by the Committee. Any Awards made to members of the Committee, however, should be authorized by a disinterested majority of the Board. Subject to the express provisions of the Plan and
to applicable law and other applicable stock exchange rules, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan;
(iii) determine the number of Shares to be covered by (or the method by which payments or other rights are to be determined in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement;
(v) amend the terms and conditions of any Award or Award Agreement and accelerate the exercisability of any Option or waive any restrictions relating to any Award; (vi) determine whether, to what extent and under what circumstances Awards
may be exercised in cash, Shares, promissory notes (provided, however, that the par value of any Shares to be issued pursuant to such exercise shall be paid in the form of cash, services rendered, personal property, real property or a combination
thereof and the acceptance of such promissory notes does not conflict with Section 402 of the Sarbanes-Oxley Act of 2002), other securities, other Awards or other property, or canceled, forfeited or suspended; (vii) interpret and
administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (viii) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any other action that 
  

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the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any
Eligible Person and any holder or beneficiary of any Award. 
 (b) Power and Authority of the Board. Notwithstanding anything to the
contrary contained herein, the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan, but only to the extent it would not cause a loss of any
benefits under Section 162(m). 
 (c) Delegation of Duties. To the extent permitted by applicable law, the Board or Committee may
from time to time delegate to a committee of one or more members of the Board or one or more officers of the Company the authority to grant or amend Awards to Eligible Persons other than (i) executives of the Company who are subject to
Section 16 of the Exchange Act, (ii) Covered Employees, or (iii) officers of the Company (or members of the Board) to whom authority to grant or amend Awards has been delegated hereunder. Any delegation hereunder shall be subject to
the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board or Committee, as applicable, may at any time rescind the authority so delegated or appoint a new delegatee. At all times, the delegatee
appointed under this Section 3(c) shall serve in such capacity at the pleasure of the Board or Committee that created the same. 
 Section 4.
Shares Available for Awards 
 (a) Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan, the
aggregate number of Shares that may be issued under the Plan shall be 2,000,000, plus an automatic annual increase on the first day of each of the Company’s fiscal years beginning on January 1, 2009 and ending on January 1, 2017 equal
to (i) the lesser of (A) 1,000,000 shares of Common Stock or (B) four percent (4%) of the number of shares of Common Stock outstanding on the last day of the immediately preceding fiscal year or (ii) such lesser number of
shares of Common Stock than provided for in Section 4(a)(i) as determined by the Board. Shares to be issued under the Plan may be either authorized but unissued Shares or Shares re-acquired and held in treasury. Any Shares that are used by a
Participant as full or partial payment to the Company of the purchase price relating to an Award, or in connection with the satisfaction of tax obligations relating to an Award, shall again be available for granting Awards (other than Incentive
Stock Options) under the Plan. In addition, if any Shares covered by an Award or to which an Award relates are not purchased or are forfeited, or if an Award otherwise terminates without delivery of any Shares, then the number of Shares counted
against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture or termination, shall again be available for granting Awards under the Plan. Notwithstanding the foregoing, (i) the
number of Shares available for granting Incentive Stock Options under the Plan shall not exceed 2,000,000, plus the automatic annual increase described above, subject to adjustment as provided in Section 4(c) of the Plan and subject to the
provisions of Section 422 or 424 of the Code or any successor provision and (ii) the number of Shares available for granting Restricted Stock and Restricted Stock Units shall not exceed 2,000,000, plus the automatic annual increase
described above, subject to adjustment as provided in Section 4(c) of the Plan. 
  

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 (b) Accounting for Awards. For purposes of this Section 4, if an Award entitles the holder
thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan.
Any Shares that are used by a Participant as full or partial payment to the Company of the purchase price relating to an Award or in connection with the satisfaction of tax obligations relating to an Award, shall again be available for granting
Awards under the Plan. In addition, if any Shares covered by an Award or to which an Award relates are not purchased or are forfeited, or if an Award otherwise terminates without delivery of any Shares, then the number of Shares counted against the
aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture or termination, shall again be available for granting Awards under the Plan. 
 (c) Adjustments. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution
or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or
other property) that thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards, (iii) the purchase price or exercise price with respect to any
Award and (iv) the limitations contained in Section 4(d) of the Plan; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number. Notwithstanding the
forgoing, any adjustments made pursuant to this Section 4(c) shall be subject to any prior approvals as may be required of any relevant stock exchanges on which the Company’s securities are then traded or any other applicable regulatory
authorities. 
 (d) Section 162(m) Award Limitations Under the Plan. No Eligible Person may be granted any Award or Awards under
the Plan which is intended to represent “qualified performance based compensation” with the meaning of Section 162(m) of the Code, for more than 1,000,000 Shares (subject to adjustment as provided for in Section 4(c) of the
Plan), in the aggregate in any taxable year. 
 Section 5. Eligibility 
 Any Eligible Person shall be eligible to be designated a Participant. In determining which Eligible Persons shall receive an Award and the terms of any
Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the 

  

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Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time
employees (which term as used herein includes, without limitation, officers and directors who are also employees), and an Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary
corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision. 
 Section 6. Awards

 (a) Options. The Committee is hereby authorized to grant Options to Eligible Persons with the following terms and conditions and
with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: 
 (i) Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee; provided, however, that such purchase price shall not be less than 100% of the Fair Market Value of a
Share on the date of grant of such Option. 
 (ii) Option Term. The term of each Option shall be fixed by the Committee
at the time of grant, but shall not be longer than 10 years from the date of grant. 
 (iii) Time and Method of
Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms (including, without limitation, cash, Shares, promissory notes
(provided, however, that the par value of any Shares to be issued pursuant to such exercise shall be paid in the form of cash, services rendered, personal property, real property or a combination thereof and the acceptance of such
promissory notes does not conflict with Section 402 of the Sarbanes-Oxley Act of 2002), other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date equal to the applicable
exercise price) in which, payment of the exercise price with respect thereto may be made or deemed to have been made. The Committee shall have the discretion to grant Options that are exercisable for unvested Shares. Should the Participant’s
Service cease while the Shares issued upon the early exercise of the Participant’s Options are still unvested, the Company shall have the right to repurchase any or all of those unvested Shares at a price per share determined by the Committee.
The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Committee and set forth in the Award
Agreement. Any repurchases must be made in compliance with the relevant provisions of California law. 
 (iv) Incentive
Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options: 
 (A) The Committee will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the option is
granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000.

  

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 (B) All Incentive Stock Options must be granted within ten years from the earlier of the
date on which this Plan was adopted by the Board or the date this Plan was approved by the shareholders of the Company. 
 (C)
Unless sooner exercised, all Incentive Stock Options shall expire and no longer be exercisable no later than 10 years after the date of grant; provided, however, that in the case of a grant of an Incentive Stock Option to a Participant
who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliate, such Incentive Stock
Option shall expire and no longer be exercisable no later than 5 years from the date of grant. 
 (D) The purchase price per
Share for an Incentive Stock Option shall be not less than 100% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option; provided, however, that, in the case of the grant of an Incentive Stock Option to a
Participant who, at the time such Option is granted, owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliate, the purchase
price per Share purchasable under an Incentive Stock Option shall be not less than 110% of the Fair Market Value of a Share on the date of grant of the Inventive Stock Option. 
 (E) Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but
shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option. 
 (b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the terms of the Plan and any applicable Award Agreement. Each Stock Appreciation Right granted under
the Plan shall confer on the holder upon exercise the right to receive[, as determined by the Committee, cash or] a number of Shares equal to the excess of (a) the Fair Market Value of one Share on the date of exercise (or, if the Committee
shall so determine, at any time during a specified period before or after the date of exercise) over (b) the grant price of the Stock Appreciation Right as determined by the Committee, which grant price shall not be less than 100% of the Fair
Market Value of one Share on the date of grant of the Stock Appreciation Right. Subject to the terms of the Plan, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions (including
conditions or restrictions on the exercise thereof) of any Stock Appreciation Right shall be as determined by the Committee. 
  

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 (c) Restricted Stock and Restricted Stock Units. The Committee is hereby authorized to grant
Restricted Stock and Restricted Stock Units to Eligible Persons with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: 
 (i) Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as the Committee may
impose (including, without limitation, a restriction on or prohibition against the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in
such installments or otherwise as the Committee may deem appropriate. 
 (ii) Issuance of Shares. Any Restricted Stock
granted under the Plan may be evidenced in such manner as the Board may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. Such
certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions applicable to such Restricted Stock. 
 (iii) Forfeiture. Except as otherwise determined by the Committee, upon a Participant’s termination of employment or
resignation or removal as a director, as the case may be (all as determined under criteria established by the Committee), during the applicable restriction period, all Shares of Restricted Stock and Restricted Stock Units at such time subject to
restriction shall be forfeited and reacquired by the Company; provided, however, that the Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining
restrictions with respect to Shares of Restricted Stock or Restricted Stock Units. 
 (d) Performance Awards. The Committee is hereby
authorized to grant Performance Awards to Eligible Persons subject to the terms of the Plan. A Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without limitation, Restricted Stock and
Restricted Stock Units), other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of such performance goals during such performance
periods as the Committee shall establish. Subject to the terms of the Plan, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any
payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee. From time to time, the Committee may designate an Award granted pursuant to the Plan
as an award of “qualified performance-based compensation” within the meaning of Section 162(m) of the Code (a “Qualified Performance Based Award”). Qualified Performance Based Awards shall, to the extent required by
Section 162(m), be conditioned solely on the achievement of one or more objective Performance Goals, and such Performance Goals shall be established by the Committee within the time period prescribed by, and shall otherwise comply with the
requirements of, Section 162(m). The Committee shall also certify in writing that such Performance Goals have been met prior to payment of the Qualified Performance Based Awards to the extent required by Section 162(m). 
  

 9 

 (e) Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to
Eligible Persons under which the Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid
by the Company to holders of Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan, such Dividend Equivalents may have such terms and conditions as the Committee shall determine. 
 (f) Other Stock Grants. The Committee is hereby authorized, subject to the terms of the Plan, to grant to Eligible Persons Shares without
restrictions thereon as are deemed by the Committee to be consistent with the purpose of the Plan. Subject to the terms of the Plan and any applicable Award Agreement, such Other Stock Grant may have such terms and conditions as the Committee shall
determine. 
 (g) Other Stock-Based Awards. The Committee is hereby authorized to grant to Eligible Persons, subject to the terms of
the Plan, such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the
Committee to be consistent with the purpose of the Plan. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(g) shall be purchased for such consideration, which may be paid by such method or methods
and in such form or forms (including, without limitation, cash, Shares, promissory notes promissory notes (provided, however, that the par value of any Shares to be issued pursuant to such exercise shall be paid in the form of cash,
services rendered, personal property, real property or a combination thereof and the acceptance such promissory notes does not conflict with Section 402 of the Sarbanes-Oxley Act of 2002), other securities, other Awards or other property or any
combination thereof), as the Committee shall determine, the value of which consideration, as established by the Committee, shall not be less than 100% of the Fair Market Value of such Shares or other securities as of the date such purchase right is
granted. 
 (h) General. 
 (i) Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other consideration as determined by the Committee and required by applicable law and any applicable stock
exchange rules. 
 (ii) Awards May Be Granted Separately or Together. Awards may, in the discretion of the Committee,
be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition to or
in tandem with awards granted under any such other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards. 
  

 10 

 (iii) Forms of Payment under Awards. Subject to the terms of the Plan and of any
applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash,
Shares, promissory notes (provided, however, that the acceptance of such promissory notes does not conflict with Section 402 of the Sarbanes-Oxley Act of 2002), other securities, other Awards or other property or any combination
thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation,
provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents with respect to installment or deferred payments. 
 (iv) Limits on Transfer of Awards. No Award (other than Other Stock Grants) and no right under any such Award shall be transferable
by a Participant other than by will or by the laws of descent and distribution and the Company shall not be required to recognize any attempted assignment of such rights by any Participant; provided, however, that, if so determined by
the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant and receive any property distributable with respect to any Award upon the death of the
Participant; provided, further, that, if so determined by the Committee, a Participant may, at any time that such Participant holds such Option, transfer a Non-Qualified Stock Option to any “Family Member” (as such
term is defined in the General Instructions to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that the Participant may not receive any consideration for such transfer, the Family Member may
not make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. Except as otherwise determined by the Committee, each Award (other than an Incentive Stock
Option) or right under any such Award shall be exercisable during the Participant’s lifetime only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative. Except as otherwise
determined by the Committee, no Award (other than an Incentive Stock Option) or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or other encumbrance thereof
shall be void and unenforceable against the Company or any Affiliate. 
 (v) Black-Out Periods. Except for Incentive
Stock Options issued pursuant to Section 6(a)(iv), if an Award expires during, or within five business days after, a trading black-out period imposed by the Company to restrict trades in the Company’s securities, then, notwithstanding any
other provision of the Plan, the Award shall expire ten business days after the trading black-out period is lifted by the Company. 
 (vi) Term of Awards. Subject to Sections 6(a)(iv)(C) and 6(h)(v), the term of each Award shall be fixed by the Committee at the time of grant, but shall not be longer than 10 years from the date of grant. 
  

 11 

 (vii) Restrictions; Securities Exchange Listing. All Shares or other securities
delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and
regulatory requirements, and the Committee may direct appropriate stop transfer orders and cause other legends to be placed on the certificates for such Shares or other securities to reflect such restrictions. If the Shares or other securities are
traded on a securities exchange, the Company shall not be required to deliver any Shares or other securities covered by an Award unless and until such Shares or other securities have been and continue to be admitted for trading on such securities
exchange. No Shares or other assets shall be issued or delivered pursuant to the Plan unless and until there shall have been compliance with all applicable requirements of applicable securities laws, including the filing and effectiveness of the
Form S-8 registration statement for the Shares issuable pursuant to the Plan, and all applicable listing requirements of any stock exchange or trading system on which Common Stock is then traded, including the American Stock Exchange and the Toronto
Stock Exchange. No Shares shall be issued or delivered pursuant to the Plan if doing so would violate any internal policies of the Company. 
 (viii) Prohibition on Repricing. Except as provided in Section 4(c) of the Plan, no Option or Stock Appreciation Right may be amended to reduce its initial exercise or grant price and no Option or Stock
Appreciation Right shall be canceled and replaced with Options or Stock Appreciation Rights having a lower exercise or grant price, without the approval of the shareholders of the Company. 
 Section 7. Amendment and Termination; Adjustments 
 (a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue or terminate the Plan at any time; provided, however, that, notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of the Company, no such amendment, alteration, suspension, discontinuation or termination shall be made that, absent such approval: 
 (i) violates the rules or regulations of the National Association of Securities Dealers, Inc. or any other securities exchange that are
applicable to the Company; 
 (ii) causes the Company to be unable, under the Code, to grant Incentive Stock Options under the
Plan; 
 (iii) increases the number of shares authorized under the Plan as specified in Section 4(a); 
 (iv) permits the award of Options or Stock Appreciation Rights at a price less than 100% of the Fair Market Value of a Share on the date
of grant of such Option or Stock Appreciation Right, as prohibited by Sections 6(a)(i) and 6(b) of the Plan or the repricing of Options or Stock Appreciation Rights, as prohibited by Section 6(h)(vii) of the Plan; 
  

 12 

 (v) would prevent the grant of Options or Stock Appreciation Rights that would qualify
under Section 162(m) of the Code; or 
 (vi) increase the aggregate number of Common Shares in respect of which Awards
have been granted and remain outstanding so as to result in: (A) the number of Common Shares reserved for issuance to Insiders pursuant to Awards exceeding 10% of the issued and outstanding Common Shares or (B) the issuance to Insiders
pursuant to Awards, within a one-year period, of a number of Common Shares exceeding 10% of the issued and outstanding Common Shares. 
 (b)
Amendments to Awards. The Committee may waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively. Except as otherwise provided herein or in an Award Agreement, the Committee may not amend,
alter, suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, if such action would adversely affect the rights of the holder of such Award, without the consent of the Participant or holder or beneficiary thereof.
Notwithstanding the foregoing, the Committee shall not waive any conditions or rights of the Company, or otherwise amend or alter any outstanding Qualified Performance Based Award in such a manner as to cause such Award not to constitute
“qualified performance based compensation” within the meaning of Section 162(m) of the Code. Notwithstanding the forgoing, no amendments shall be made to any granted Awards to (i) reduce the exercise price of Option, or cancel
and reissue any Options so as to in effect reduce the exercise price of Options, for the benefit of Insiders or (ii) extend the termination date beyond the original expiration date for the benefit of Insiders without first obtaining approval of
the shareholders in accordance with the requirements of applicable stock exchange rules; and no action shall be taken with respect to granted Options without the consent of the optionee, unless the Board determines that such action does not
materially alter or impair such Option. 
 (c) Correction of Defects, Omissions and Inconsistencies. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or maintain the effectiveness of the Plan. 
 Section 8. Income Tax Withholding 
 In order to comply
with all applicable federal, state or local income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal, state or local payroll, withholding, income or other taxes, which are the
sole and absolute responsibility of a Participant, are withheld or collected from such Participant. In order to assist a Participant in paying all or a portion of the federal, state and local taxes to be withheld or collected upon exercise or
receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (i) electing to
have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (but only to the extent of the
minimum amount required to be withheld under applicable laws or regulations) or (ii) delivering to the Company Shares other than Shares 

  

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issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes (but
only to the extent of the minimum amount required to be withheld under applicable laws or regulations). The election, if any, must be made on or before the date that the amount of tax to be withheld is determined. 
 Section 9. General Provisions 
 (a) No Rights to
Awards. No Eligible Person or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons or holders or beneficiaries of Awards under the Plan. The terms
and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants. 
 (b) Award
Agreements. No Participant will have rights under an Award granted to such Participant unless and until an Award Agreement shall have been duly executed on behalf of the Company and, if requested by the Company, signed by the Participant.

 (c) Plan Provisions Control. In the event that any provision of an Award Agreement conflicts with or is inconsistent in any respect
with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control. 
 (d) No Rights of
Shareholders. Except with respect to Shares of Restricted Stock as to which the Participant has been granted the right to vote, neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and privileges
of, a shareholder of the Company with respect to any Shares issuable to such Participant upon the exercise or payment of any Award, in whole or in part, unless and until such Shares have been issued in the name of such Participant or such
Participant’s legal representative without restrictions thereto. 
 (e) No Limit on Other Compensation Arrangements. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases.

 (f) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the
employ, or as giving a director of the Company or an Affiliate the right to continue as a director or an Affiliate of the Company or any Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate a
Participant’s employment or service at any time, with or without cause. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment, or terminate the term of a director of the Company or an Affiliate, free
from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company or any
Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. The Awards granted hereunder shall not form any part of the wages or salary of any Eligible Person for purposes of
severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances 
  

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shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any right or benefit under the
Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By participating in the Plan, each
Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby. 
 (g) Governing Law. The validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any
Award, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of California. 
 (h)
Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect. 
 (i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and an
Eligible Person or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate. 
 (j) Other Benefits. No compensation or benefit awarded to or realized by any Participant under the Plan
shall be included for the purpose of computing such Participant’s compensation under any compensation-based retirement, disability, or similar plan of the Company unless required by law or otherwise provided by such other plan. 
 (k) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated. 
 (l) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the
construction or interpretation of the Plan or any provision thereof. 
 (m) Section 16 Compliance; Section 162(m)
Administration. The Plan is intended to comply in all respects with Rule 16b-3 or any successor provision, as in effect from time to time, and in all events the Plan shall be construed in accordance with the requirements of Rule 16b-3.
If any Plan provision does not comply with Rule 16b-3 as hereafter amended or interpreted, the provision shall be deemed inoperative. The Board of Directors, in its absolute discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan with 
  

 15 

 
respect to persons who are officers or directors subject to Section 16 of the Exchange Act without so restricting, limiting or conditioning the Plan
with respect to other Eligible Persons. With respect to Options and Stock Appreciation Rights, the Company intends to have the Plan administered in accordance with the requirements for the award of “qualified performance-based
compensation” within the meaning of Section 162(m) of the Code. 
 (n) Conditions Precedent to Issuance of Shares. Shares
shall not be issued pursuant to the exercise or payment of the purchase price relating to an Award unless such exercise or payment and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, applicable Canadian securities laws, the requirements of any applicable stock exchange and the California General Corporation Law.
As a condition to the exercise or payment of the purchase price relating to such Award, the Company may require that the person exercising or paying the purchase price represent and warrant that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation and warranty is required by law. 
 Section 10. Effective Date of the Plan 
 The Plan became effective on October 24, 2007.

 Section 11. Term of the Plan 
 No Award
shall be granted under the Plan after (a) the March 15, 2017 or (b) any earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. However, unless otherwise expressly provided in the Plan or
in an applicable Award Agreement, any Award theretofore granted may extend beyond such date, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall
extend beyond the termination of the Plan. 
  

 16

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