UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of earliest event reported: May 13, 2020

 

NovaBay Pharmaceuticals, Inc.

(Exact Name of Registrant as Specified in Charter)

 

Delaware

001-33678

68-0454536

(State or Other Jurisdiction

of Incorporation)

(Commission File Number)

(I.R.S. Employer

Identification No.)

 

2000 Powell Street, Suite 1150, Emeryville, CA 94608

(Address of Principal Executive Offices) (Zip Code)

 

(510) 899-8800

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading Symbol(s)

 

Name of Each Exchange On Which Registered

Common Stock, par value $0.01 per share

 

NBY

 

NYSE American

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

   

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

   

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

   

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01     Entry into a Material Definitive Agreement

 

On May 13, 2020, NovaBay Pharmaceuticals, Inc. (the “Company”) entered into a Services Agreement (the “Agreement”) with TLF Bio Innovation Lab, LLC, a Delaware limited liability corporation (“TLF Bio Innovation”), which is retroactively effective as of April 1, 2020 (the “Effective Date”).

 

Pursuant to the Agreement, TLF Bio Innovation will act as the manager for the market relaunch of antibacterial product CelleRx as a lifestyle hygiene product, which shall include, but is not limited to, the following services: conducting market and product research, proposing and coordinating marketing and advertising efforts through appropriate digital and offline channels and developing a new direct-to-consumer strategy for CelleRx. The Agreement is for one (1) year commencing on the Effective Date with the term to be extended upon mutual written agreement of the Company and TLF Bio Innovation.

 

As consideration for such services, the Company will pay TLF Bio Innovation a monthly fee of $37,500 during the Term. Subject to the Company receiving shareholder approval to increase its authorized shares of common stock at its 2020 annual meeting, in addition to the cash consideration, upon TLF Bio Innovation’s successful completion of certain conditions provided in the Agreement, the Company will issue purchase warrants exercisable for up to 2,000,000 shares of the Company’s common stock (the “Warrants”) to TLF Bio Innovation. Warrants exercisable for 500,000 shares of the Company’s common stock will be issued on July 15, 2020 upon the completion of certain milestones, and Warrants exercisable for 250,000 shares of the Company’s common stock will be issued within 15 calendar days of the end of each month of July through December 2020 (or Warrants exercisable for an aggregate amount of up to 1,500,000 shares of the Company’s common stock) upon certain revenue metrics being met at the end of each month. If such milestones or revenue metrics are not met at the applicable time, such Warrants will not be issued. The Warrants will have an exercise price of the average closing price of the Company’s common stock during the month of April 2020 or US$0.865, will expire on the five-year anniversary of the issuance date, and will contain customary adjustment provisions in the event of changes in the capitalization of the Company.

 

In connection with the above arrangement, the Company and TLF Bio Innovation also entered into a Securities Purchase Agreement (the “SPA”) in which the Company sold 1,000 shares (the “Shares”) of the Company’s common stock for an aggregate principal amount of $1,030.

 

No underwriting discounts or commissions will be paid. The Warrants, if ever issued pursuant to the Agreement, and the Shares to be issued pursuant to the SPA will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent subsequent registration or an applicable exemption from registration requirements. The Company is relying on the private placement exemption from registration provided by Section 4(a)(2) of the Securities Act and by Rule 506 of Regulation D, and in reliance on similar exemptions under applicable state laws.

  

The form of Warrant, the Agreement and the SPA are filed as Exhibit 4.1, Exhibit 10.1 and Exhibit 10.2, respectively, to this Current Report on Form 8-K and are incorporated herein by reference. The above description of the terms of the Warrants, the Agreement and the SPA are qualified in their entirety by reference to such exhibits.

 

Item 3.02     Unregistered Sales of Equity Securities

 

The information disclosed in Item 1.01 of this Current Report on Form 8-K regarding the potential issuance of unregistered Warrants pursuant to the Agreement, which is subject to TLF Bio Innovation’s successful completion of certain milestones, and the issuance of the Shares pursuant to the SPA is incorporated herein by reference.

 

 

 

Item 9.01     Financial Statements and Exhibits

 

(d)     Exhibits

 

Exhibit No.

 

Description

4.1

 

Form of Warrant

10.1

 

Services Agreement, dated May 13, 2020

10.2

 

Securities Purchase Agreement, dated May 13, 2020

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

NovaBay Pharmaceuticals, Inc.

 

  (Registrant)  

 

 

 

 

 

By:

/s/ Justin Hall

 

 

 

Justin Hall

 

 

 

President, Chief Executive Officer and General Counsel

 

       
Dated: May 18, 2020      

 

 

 

 

 

Exhibit 4.1

 

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER ANY STATE SECURITIES OR BLUE SKY LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY PROPOSED TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT. THIS SECURITY IS SUBJECT TO THE TRANSFER RESTRICTIONS SET FORTH HEREIN. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

 

COMMON STOCK PURCHASE WARRANT

 

NOVabay pharmaceuticals, inc.   

 

Warrant Shares: [______]   Initial Exercise Date: [________]  
  Issue Date: [_________]

                       

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, TLF Bio Innovation Lab, LLC or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after [_______], 2020 (the “Initial Exercise Date”) and on or prior to 5:00 p.m. (New York City time) on [_______], 2025 (the “Termination Date”) but not thereafter, to subscribe for and purchase from NovaBay Pharmaceuticals, Inc., a Delaware corporation (the “Company”), up to [_______] shares (as subject to adjustment hereunder, the “Warrant Shares”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

 

Section 1.     Definitions. Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Services Agreement (the “Agreement”), effective April 1, 2020, between the Company and the Holder.

 

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Section 2.     Exercise.

 

a)     Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy or PDF copy submitted by e-mail (or e-mail attachment) of the Notice of Exercise in the form annexed hereto (the “Notice of Exercise”). Within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined in Section 2(c)(i) herein) following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date on which the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

 

b)     Exercise Price. The exercise price per share of Common Stock under this Warrant shall be $0.865, subject to adjustment hereunder (the “Exercise Price”).

 

 

c)

Mechanics of Exercise.

 

i.     Delivery of Warrant Shares Upon Exercise. The Company shall cause the Warrant Shares purchased hereunder to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale by the Holder without volume or manner-of-sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate, registered in the Company’s share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to such exercise to the address specified by the Holder in the Notice of Exercise by the date that is the earliest of (i) two (2) Trading Days after the delivery to the Company of the Notice of Exercise, (ii) one (1) Trading Day after delivery of the aggregate Exercise Price to the Company and (iii) the number of Trading Days comprising the Standard Settlement Period after the delivery to the Company of the Notice of Exercise (such date, the “Warrant Share Delivery Date”). Upon delivery of the Notice of Exercise, the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date of delivery of the Warrant Shares, provided that payment of the aggregate Exercise Price is received within the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period following delivery of the Notice of Exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program so long as this Warrant remains outstanding and exercisable. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of the Notice of Exercise.

 

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   ii.     Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

 

iii.     Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(c)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.     No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

v.     Charges, Taxes and Expenses. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder in the Notice of Exercise; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof. In the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company shall have the right to require, as a condition thereto, the prior or contemporaneous payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. Holder shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares, in each case, to the extent available.

 

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vi.     Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

 

d)     Holder’s Exercise Limitations. The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates (such Persons, “Attribution Parties”)), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Attribution Parties shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Attribution Parties and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Attribution Parties.  Except as set forth in the preceding sentence, for purposes of this Section 2(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(d) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Attribution Parties) and of which portion of this Warrant is exercisable up to the Beneficial Ownership Limitation shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s good faith determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Attribution Parties) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability for exercises of the Warrant that are not in compliance with the Beneficial Ownership Limitation. For purposes of this Section 2(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  Upon the written request of a Holder, the Company shall within one (1) Trading Day confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or Attribution Parties since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon prior written notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(d), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(d) shall continue to apply. Any such increase or decrease in the Beneficial Ownership Limitation will apply only to the Holder and not to any other holder of Warrants. Any such increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. Notwithstanding the foregoing, the provisions of this Section 2(d) shall not apply to any Holder (together with such Holder’s Attribution Parties and any other Persons acting as a group together) who beneficially owns in excess of the Maximum Percentage of the shares of Common Stock outstanding as of the Issue Date. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

 

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Section 3.     Certain Adjustments.

 

a)     Stock Dividends and Splits. If the Company, at any time on or after the date of the Services Agreement and while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the date such dividend or distribution occurs and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

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b)     Fundamental Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, merger or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 2(d) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(d) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction (or, if later, the date of the public announcement of the applicable Fundamental Transaction), purchase this Warrant from the Holder by paying to the Holder the Black Scholes Value (as defined below) of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction using the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of Common Stock of the Company in connection with the Fundamental Transaction, whether that consideration be in the form of cash, stock or any combination thereof, or whether the holders of Common Stock are given the choice to receive from among alternative forms of consideration in connection with the Fundamental Transaction.  “Black Scholes Value” means the value of this Warrant based on the Black-Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the greater of (i) the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (ii) the greater of (x) the last VWAP immediately prior to the public announcement of such Fundamental Transaction and (y) the last VWAP immediately prior to the consummation of such Fundamental Transaction, (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, and (E) a zero cost of borrow. The payment of the Black Scholes Value will be made by wire transfer of immediately available funds within five Business Days of the Holder’s election (or, if later, on the effective date of the Fundamental Transaction). The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(b) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for the Company (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and the Successor Entity may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

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c)     Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

d)     Notice to Holder.

 

i.     Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly deliver to the Holder by facsimile or email a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

ii.     Notice to Allow Exercise by Holder. If during the term in which the Warrant may be exercised (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be delivered by facsimile or email to the Holder at its last facsimile number or email address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided in this Warrant constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

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Section 4.     Transfer of Warrant.

 

a)     Transferability. Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant as provided herein, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date on which the Holder delivers an assignment form (in the form attached hereto) to the Company assigning this Warrant. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

b)     New Warrants. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the original Issue Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)     Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

d)     Transfer Restrictions. If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale without volume or manner-of-sale restrictions or current public information requirements pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, provide to the Company an opinion of counsel, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that the transfer of this Warrant does not require registration under the Securities Act.

 

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e)     Representation by the Holder. The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

 

Section 5.     Miscellaneous.

 

a)     No Rights as Stockholder Until Exercise; No Settlement in Cash. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(c)(i), except as expressly set forth in Section 3. In no event shall the Company be required to net cash settle an exercise of this Warrant.

 

b)     Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)     Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d)     Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

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Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will, so long as any of the Warrants are outstanding, (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

 

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)     Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Services Agreement.

 

f)     Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws.

 

g)     Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this Warrant or the Services Agreement, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

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h)     Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered to the address for the Holder in the Warrant Register.

 

i)     Limitation of Liability. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

j)     Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

k)     Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

l)     Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

 

m)     Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

 

n)     Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

 

 

********************

 

 

(Signature Page Follows)

 

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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.

 

 

 

novabay pharmaceuticals, inc.

 

 

By:__________________________________________

     Name: Justin Hall

     Title: President, Chief Executive Officer and General Counsel 

 

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NOTICE OF EXERCISE

 

To:     novabay pharmaceuticals, inc.

 

(1)     The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2)     Payment shall take the form of lawful money of the United States.

 

(3)     Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

 

The Warrant Shares shall be delivered to the following DWAC Account Number:

 

  Broker Name:      
       
  Broker DTC DWAC #:     
       
  Broker Contact:      
       
  Account #:    

                          

(4) Accredited Investor. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

 

[SIGNATURE OF HOLDER]

 

Name of Investing Entity:  
Signature of Authorized Signatory of Investing Entity:  
Name of Authorized Signatory:  
Title of Authorized Signatory:  
Date:  

 

 

 

 

EXHIBIT B

 

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

 

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

Name:

 
 

(Please Print)

   

Address:

 

 

(Please Print)

   
Phone Number:  
   
Email Address:  

 

Dated: _______________ __, ______

 

 

Holder’s Signature:

   

 

Holder’s Address:

   

 

 

 

 

Exhibit 10.1

 

SERVICES AGREEMENT

 

 

This Services Agreement (“Agreement”) is effective as of April 1, 2020 (“Effective Date”), by and between TLF Bio Innovation Lab LLC, a Delaware limited liability corporation whose principal place of business is at 44 Cypress Street, Brookline, MA 02445 (“Provider”), and NovaBay Pharmaceuticals, Inc. (“Company”), a Delaware corporation whose address is 2000 Powell St. Suite 1150, Emeryville, CA 94608, each separately referred as a “Party” and collectively the “Parties.”

 

Company desires to hire Provider to provide specified services for Company as outlined in, and pursuant to the terms of, this Agreement and Provider is willing to provide such services to Company, on the terms and conditions set forth herein.

 

1.

Services

 

1.1   Scope of Work. Provider shall serve as Company’s product manager for its product re-launch of CelleRx (the “Product”), repositioning the Product in the market as a lifestyle hygiene product. Generally, Provider’s scope of work shall include but not be limited to: (i) executing the launch of the Product in the marketplace; (ii) conducting thorough market and product research relating to the Product on an ongoing basis; (iii) developing Product positioning, marketing messaging and Product differentiation strategy; (iv) proposing and coordinating the distribution of Product marketing and advertising in appropriate digital and offline channels, and analysis of which Product marketing and advertising is best driving potential buyer traffic and resulting in Product purchase conversion; (v) creating a Product strategy and collateral for marketing, advertising, public relations, training/education and visual merchandising (including digital strategy); and (vi) assisting Company’s executive team in its development of Company’s new direct-to-consumer strategy for the Product.

 

1.2   Performance of Services. The Parties agree that Provider will undertake the services set forth in Exhibit A (the “Services”) in a timely and professional manner consistent with the time frames and terms set forth in Exhibit A. In performing the Services, Provider agrees to provide its own equipment, tools and other materials at its own expense. Under certain circumstances agreed to in advance by Company, Company will make its facilities available to Provider as is reasonably necessary for the provision of the Services. For any work performed on the premises of Company, Provider will comply with Company’s security, confidentiality, safety and health policies. Provider may not subcontract or otherwise delegate its obligations under this Agreement or use any members, employees, or representatives other than those individuals listed in Exhibit B to fulfill such Services without Company’s prior written consent, which consent shall not be unreasonably withheld.

 

1.3   No Conflict of Interest. Provider represents and warrants that entering into this Agreement and the performance of the Services under this Agreement do not conflict with or violate any duties or any agreement pursuant to which Provider is a Party or third party beneficiary. Provider agrees during the term of this Agreement not to accept work, enter into any agreement, or accept any obligation that is inconsistent or incompatible with its obligations under this Agreement, or the scope of Services rendered to Company. Provider further agrees not to provide any services that are the same or similar to those Services Provider is providing to the Company to any competitor of Company in the hypochlorous acid skin care market targeted during the term of this Agreement.

 

1.4   Business Development. Provider is encouraged to present to the Company executive team any strategic business development ideas Provider may have (including, but not limited to, identifying new products, possible M&A activity, strategic partnerships and fundraising). Should Provider wish to present a comprehensive proposal that includes a detailed term sheet and additional compensation, the executive team will review and, if appropriate, work with Provider to present the opportunity to the Board for consideration. Any Board communications by Provider, in relation to this or any topic, will properly be sent to the Company CEO and discussed first before sent to the Board, as is typical and appropriate corporate protocol. The Company executive team and/or Board will be responsible for evaluating the proposal and determining Provider’s compensation.

 

 

 

1.5    New Products. The Parties may mutually agree in writing that Provider will offer additional services for the Product besides those currently provided for in this Agreement, and/or similar services for other Company products. In the event that the Parties mutually agree to add such services for the Product and/or other product services (collectively, “New Services”), then the Parties will execute an addendum to this Agreement providing the specifics of such arrangement for New Services. Further, any additional revenue received by the Company directly resulting from any New Services would count toward the Revenue Metrics as outlined in Exhibit E hereto and the resulting Revenue Metrics Equity Award calculation outlined in Section 2.1(ii)(b) below, as appropriate.

 

2.

Compensation

 

2.1    Compensation for Services.

 

(i)     Monthly Cash Compensation. As cash compensation for the Services performed by Provider, Company will pay Provider a monthly fee of $37,500 due within ten (10) calendar days of each month end during the term of this Agreement.

 

(ii)     Milestone/Revenue Metrics Equity Awards. Subject to Section 2.2 and the Company receiving shareholder approval to increase its authorized shares of common stock at the Company’s 2020 annual meeting, in addition to the monthly cash compensation outlined in subpart (i) above for the Services rendered, upon Provider’s successful completion of the Milestones (both as defined and further described in Exhibit A attached hereto) and Revenue Metrics (as further described in Exhibit E attached hereto) within the applicable specified time periods, Provider will be issued Company equity awards, as per the below:

 

(a)     Milestone Equity Award. Provider shall provide a written report to Company no later than 10 calendar days after such applicable period end of April 30, 2020, May 31, 2020 and June 30, 2020, outlining how such deliverables as outlined in Exhibit A attached hereto for each period were accomplished and how such deliverables resulted in a tangible benefit to Company. Thereafter, upon Company’s receipt of each written report that conveys such Milestones have been met, Provider will be issued on July 15, 2020 warrants exercisable for 500,000 shares of Company common stock, to be immediately exercisable with a strike price of US$0.865, which is equal to the average closing price of Company’s common stock in April 2020, as reported by the NYSE American (the “Milestone Equity Award”).

 

(b)     Revenue Metrics Equity Awards. Provider will be issued warrants exercisable for 250,000 shares of Company common stock, to be immediately exercisable with a strike price of US$0.865, no later than 15 calendar days after the end of each month of July through December 2020 in which Company’s revenue for the Product equals or exceeds 80% of the revenue projections in Exhibit E attached hereto (for potential aggregate warrants exercisable for 1,500,000 shares of Company common stock, the “Revenue Metrics Equity Awards” and together with the Milestone Equity Award, the “Equity Awards”). Such revenue projections are those Provider has provided to Company’s Board of Directors for engagement of the Services outlined hereto and specifically reflect the following: US$281,025 in revenue for the month of July 2020; US$426,455 in revenue for the month of August 2020; US$773,225 in revenue for the month of September 2020; US$1,019,134 in revenue for the month of October 2020; US$1,253,271 in revenue for the month of November 2020; and US$1,325,183 in revenue for the month of December 2020. For the avoidance of doubt, Provider is only considered to meet such Revenue Metrics if its expenses and other costs are in line and do not exceed those also outlined in Exhibit E attached hereto.

 

 

 

Both the Milestone Equity Award and Revenue Metrics Equity Awards will be subject to the terms of the separate warrant agreements, if and when issued.

 

2.2    Accredited Investor Representation. To the extent that any consideration given to Provider by Company is in the form of Company equity, as of the Effective Date and any date that Provider is granted equity awards, Provider represents and warrants to Company that it is an “accredited investor” under Rule 501(a) under the Securities Act of 1933, as amended, pursuant to such definition laid out in Exhibit C attached hereto. Further, Provider agrees to notify Company if it no longer meets the requirements of an “accredited investor” and furnish any information upon request by Company to assure compliance with applicable U.S. federal and state securities laws in connection with such equity award.

 

2.3    Pre-Approved Expenses. Provider will seek Company pre-approval of all third party and any other expenses (including, but not limited to, expenses in connection with Operation Activity and Variable Advertising Activity, both as defined below) incurred in performing Services under this Agreement. If approved, Provider shall coordinate and help facilitate Company paying such expenses directly to such third party. For purposes of this section, “Operational Activity” includes, but is not limited to, expenses outsourced by Provider related to influencers, e-commerce platform design, configuration and management, brand architecture, style guide and package redesign and other operation expenses. For purposes of this section, “Variable Advertising Activity” includes expenses to agencies like Facebook, Google SEM and other social media platforms.

 

2.4    Travel Expenses. Travel expenses are not reimbursable except for pre-approved and reasonable travel expenses incurred by Provider in accordance with the Company’s Travel & Expense Policy, attached as Exhibit D hereto, for travels requested by Company, and solely and exclusively for the purpose of carrying on Company’s business at such travels. However, in no case shall travel time be reimbursed. Air fares shall be economy class.

 

3.

Independent Contractor

 

3.1    Relationship. Provider’s relationship with Company will be that of an independent contractor and nothing in this Agreement should be construed to create a partnership, joint venture, fiduciary, agency or employer-employee relationship between the Parties. Neither the Provider, nor its members, employees or representatives (including, but not limited to, those listed on Exhibit B) are agents of Company and are not authorized and will not have any authority to make any representation, contract or commitment on behalf of Company. Further, nothing in this Agreement will be construed to confer upon any third party other than the Parties hereto a right of action under this Agreement or in any manner whatsoever. Provider understands and agrees that none of Provider, its members, employees or representatives (including, but not limited to, those listed on Exhibit B) will be entitled to any of the employee benefits that Company may make available to its employees. Provider will not represent or promise to any of (i) its members, employees or representatives (including, but not limited to, those listed on Exhibit B), or (ii) any subcontractor or employee Provider hires or employs with Company’s consent as required by Section 1.2 to assist it in the performance of the Services, that they will be entitled to any of the employee benefits that Company may make available to its employees.

 

3.2    Taxes. Provider will be solely responsible for all taxes, penalties and the filing of tax returns, social security, disability and other contributions with respect to Provider’s income from the payments made by Company under this Agreement and the Equity Awards issued pursuant to Section 2.1 hereof. Company will not withhold or make payments for social security, unemployment insurance or disability insurance contributions, Internal Revenue Code Section 409A or obtain worker’s compensation insurance for Provider or any of its members, employees or representatives. Nor will Company have any obligation to indemnify Provider or any of its members, employees or representatives for such tax obligations.

 

 

 

4.

Intellectual Property

 

4.1    Prior Work. Company understands that the members and employees of Provider have experience and knowledge in the Services, and acknowledges that such prior experience is one of the factors for Company’s choice of Provider for the Services. Company agrees that all creations (including, without limitation, any technology, inventions, discoveries, works of authorship or other prior creations) that were conceived, created or reduced to practice by or for Provider (alone or with others) prior to commencement of Provider’s professional services work for Company (collectively, “Prior Work”) are owned by Provider and not assigned to Company under this Agreement.

 

4.2    Developments. Provider agrees that all worldwide rights, title and interest in any ideas, techniques, inventions, systems, feedback, formulae, business or marketing plans, projections or analyses, discoveries, technical information, programs, prototypes, improvements or creations that are related to Company’s business or products and that Provider or its members, employees or representatives (including, but not limited to, those listed on Exhibit B) acting on behalf of Provider creates, conceives, discovers, reduces to practice or makes, alone or with others, in the course of performing the Services (collectively, “Developments”) will belong exclusively to Company. In accordance with these obligations:

 

(i)     Provider hereby assigns in perpetuity to Company all rights, title and interest in any invention, improvement or discovery conceived of, or first reduced to practice, by Provider or its members, employees or representatives (including, but not limited to, those listed on Exhibit B) in the course of performing the Services.

 

(ii)     Provider hereby assigns in perpetuity to Company all rights, title and interest in the copyright to any copyrightable Development that is a work of authorship, whether in human readable or machine readable form, first created or composed by Provider or its members, employees or representatives (including, but not limited to, those listed on Exhibit B) in the course of performing the Services, including without limitation any and all literary works, musical works, dramatic works, pictorial works, graphic works, audiovisual works and sound recordings. Provider agrees to waive any moral rights it may have or acquire in the Developments, and to the extent any such moral rights cannot be waived, Provider hereby grants Company an exclusive, irrevocable, royalty free license to reproduce, distribute, sell, modify, make derivative works of, translate, publish, dispose of, and use any such moral rights and to authorize others to exercise the foregoing rights.

 

(iii)     Provider represents and warrants that if Provider or its members, employees or representatives (including, but not limited to, those listed on Exhibit B) furnishes to Company any patented or patentable inventions or any copyrighted or copyrightable material that were not first conceived of, reduced to practice, discovered, created or composed by Provider or its members, employees or representatives (including, but not limited to, those listed on Exhibit B) in performing the Services, Provider (1) will identify in writing such inventions or material before or at the time of delivering the Developments to Company and (2) hereby grants Company a royalty-free, nonexclusive, and irrevocable license to reproduce, distribute, sell, modify, make derivative works of, translate, publish, use and dispose of these inventions and material and to sub-licenses all of the foregoing rights. Notwithstanding the foregoing, Provider will not incorporate pre-existing material owned by any third party into any Development without Company’s prior written knowledge and consent.

 

(iv)     Provider agrees to execute (or has executed) all documents and to take all other action reasonably requested by Company to enable Company to secure, perfect, record or preserve the ownership, assignment and license rights in the Developments as set forth in this Section 4 anywhere in the world.

 

 

 

(v)     Provider agrees to take all legally necessary action to ensure that all members, employees or representatives (including, but not limited to, those listed on Exhibit B) engaged by Provider in the performance of this Agreement will be bound by the terms of this Section 4. Provider represents and warrants that it has or will have with its members, employees and representatives engaged in the Services written agreements sufficient to ensure that all rights, including moral rights, in the Developments will be assigned and licensed to Company as set forth under this Section 4, and Provider will furnish such executed agreements to Company upon request.

 

5.

CONFIDENTIAL INFORMATION AND HIPAA

 

5.1  Confidential Information. Provider agrees and acknowledges that during the performance of the Services, Provider and its members, employees and representatives (including, but not limited to, those listed on Exhibit B), may receive and have access to confidential, proprietary, and trade secret information about Company and/or its clients (“Confidential Information”). For purposes of this Agreement, “Confidential Information” means and will include, but is not limited to: (i) any information, materials or knowledge regarding Company and its business, financial condition, products, programming techniques, customers, suppliers, technology or research and development that is disclosed to Provider and its members, employees or representatives (including, but not limited to, those listed on Exhibit B) or to which Provider and its members, employees or representatives (including, but not limited to, those listed on Exhibit B) have access to in connection with performing the Services; (ii) the Developments; and (iii) the existence and terms and conditions of this Agreement; provided however that Provider may reference Company as a client of Provider using a statement approved in advance by Company. Regardless of whether so marked or identified, however, any information that the recipient knew or should have known, under the circumstances, was considered confidential or proprietary by Company, will be considered Confidential Information of Company.

 

5.2  Protection of Confidential Information. Provider agrees to hold all Confidential Information in strict confidence, not to use it in any way, commercially or otherwise, except in performing the Services, and not to disclose it to others. Provider further agrees to take all action reasonably necessary to protect the confidentiality of all Confidential Information including, without limitation, implementing and enforcing procedures to minimize the possibility of unauthorized use or disclosure of Confidential Information. Provider will ensure that each of its members, employees, subcontractors (if any) or representatives (including, but not limited to, those listed on Exhibit B) who will have access to the Confidential Information executes an agreement, the form of which may be subject to the approval of Company in its sole discretion (the “Confidentiality Agreement”), obligating the member, employee, subcontractor or representative, as applicable, to keep all Confidential Information confidential and not to use the Confidential Information in any way, commercially or otherwise, except in performing the Services, and Provider will furnish such executed agreements to Company upon request.

 

5.3  Exceptions. Confidential Information excludes information that (i) Provider can establish through written records; (ii) is readily accessible to the public in a written publication prior to the date of this Agreement; (iii) becomes generally known, previously disclosed or available to the public through no improper action by Provider; (iv) was independently developed by Provider without use or reference to Company’s Confidential Information; (v) becomes known to Provider, without restriction, from a third party not bound by an obligation of confidentiality covering the Confidential Information; or (vi) as required by law or any regulatory or government authority, provided that Provider shall provide prompt prior written notice thereof to Company to enable Company to seek a protective order or otherwise prevent the disclosure.

 

5.4 Non-solicitation. The Parties covenant and agree that during the period expiring one (1) year after the date of this Agreement, neither Party will, directly or indirectly (through its representatives, professional search firms or otherwise), solicit, induce, encourage or attempt to solicit, induce or encourage any employee or contractor of the other Party to terminate such person’s employment or relationship with the other Party in order to become an employee or contractor to or for the soliciting Party; provided, however, that the foregoing provisions shall not preclude the soliciting Party from (i) the use of public general advertisements or search firms (in each case, not directed at, or targeted to the other Party or its employees) or the hiring of any person who responds thereto, or (ii) the solicitation or hiring of any such person who contacts the soliciting Party of his or her own initiative.

 

 

 

5.5 HIPAA. It is not intended that Provider or its members, employees or representatives (including, but not limited to, those listed on Exhibit B) will receive from Company, or create or receive on behalf of Company, patient healthcare, billing, or other confidential patient information(“Patient Information”) in performing the Services hereunder. Patient Information, as the term is used herein, includes all “Protected Health Information,” as that term is defined in 45 Code of Federal Register 164.501. To the extent that Provider or its members, employees or representatives (including, but not limited to, those listed on Exhibit B) receive Patient Information, Provider shall comply with all laws, rules and regulations relating to the confidentiality of Patient Information, including the applicable provisions of the privacy regulations promulgated pursuant to Health Insurance Portability and Accountability Act of 1996, Title XIII of the American Recovery and Reinvestment Act of 2009 (Public Law 111-005) (“HIPAA”) and the rules, guidance and regulations promulgated thereunder, as amended from time to time.

 

6.

Term and Termination

 

6.1   Term. The term of this Agreement shall be one (1) year from the Effective Date, unless terminated sooner as provided hereunder. The term may be modified or extended only by mutual written agreement of the Parties.

 

6.2   Termination. This Agreement may be terminated as follows:

 

(i)     Company may terminate this Agreement immediately upon written notice to Provider if (1) any Milestone outlined in Exhibit A, Periodic Deliverables, hereto is not met under the timeline provided in Exhibit A, as determined by Company, (2) any projection (including gross profit and net profit metrics) in the Profit and Loss Statement attached as Exhibit E hereto, is not within an 80% achievement level of the projection for any monthly period after July 31, 2020, or (3) Provider has otherwise breached this Agreement barring a failure to deliver an Ongoing Deliverable pursuant to subpart (ii) below;

 

(ii)     Company may terminate this Agreement immediately upon written notice to Provider if Provider has failed to deliver any of the Ongoing Deliverables outlined in Exhibit A, which has not been remedied within five (5) calendar days upon written notice by Company; or

 

(iii)     After June 30, 2020, either Party may terminate this Agreement at any time for any reason by providing the other Party with fifteen (15) calendar days’ prior written notice.

 

6.3  Effect of Termination. Upon the effective date of any termination of this Agreement, Provider will immediately cease performing Services under this Agreement. If this Agreement has been terminated by Company pursuant to Section 6.2(i) or Section 6.2(ii), Company will not owe Provider for any Services conducted during or after the month in which the Milestone or projection was not met (as relates to Section 6.2(i)(1) and Section 6.2(i)(2) as applicable), the breach occurred (as relates to Section 6.2(i)(3)) or repeated failure of the Ongoing Deliverable occurred (as relates to Section 6.2(ii). If this Agreement is terminated pursuant to Section 6.2(iii), Company agrees to pay Provider compensation due for Services actually rendered, in accordance with Section 2 (which, for the avoidance of doubt, may include the Milestone Equity Award and/or the Revenue Metrics Equity Awards, the latter of which will be due even if 80% of such revenue metrics are met post-termination, if such accomplishment is due entirely or predominately by the prior efforts of Provider), and such amounts will be in full satisfaction of any obligation or liability of Company to Provider for payments due to Provider under this Agreement. Sections 3, 4, 5, 6, 7, 8, and 9 will survive the expiration or termination of this Agreement. Termination of this Agreement by either Party will not act as a waiver of any breach of this Agreement and will not act as a release of either Party from any liability for breach of such Party’s obligations under this Agreement. Neither Party will be liable to the other for damages of any kind solely as a result of terminating this Agreement in accordance with its terms, and termination of this Agreement by a Party will be without prejudice to any other right or remedy of such Party under this Agreement or applicable law.

 

 

 

6.4  Delivery of Materials. Upon any termination of this Agreement or at any time upon Company’s request, Provider will promptly return to Company any and all Information of Company. Upon any termination and receipt of payment therefore, Provider will also promptly deliver all work product, including Developments then in progress for deliverables under this Agreement.

 

7.

Indemnification

 

The Parties shall mutually indemnify, defend and hold harmless each other from and against any and all losses incurred by the other (and in the case of Provider, including its members, employees and representatives (including, but not limited to, those listed on Exhibit B)) (the “Indemnified Party”) which arise out of or result from misrepresentation, or breach or non-fulfillment of any covenant contained in this Agreement. Notwithstanding the foregoing, the Indemnifying Party shall not be responsible for any liability, loss or damage resulting from the negligence, intentional misconduct or willful malfeasance by the Indemnified Party.

 

8.

Limitation Of Liabilities and Damages

 

IN NO EVENT WILL COMPANY BE LIABLE FOR ANY EXEMPLARY, SPECIAL, INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES OF ANY KIND IN CONNECTION WITH THIS AGREEMENT, EVEN IF COMPANY HAS BEEN INFORMED IN ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES. FURTHER, THE LIABILITY OF COMPANY SHALL NOT EXCEED THE TOTAL CONSIDERATION PAID OR PAYABLE BY COMPANY TO PROVIDER PURSUANT TO THIS AGREEMENT IN THE 12 MONTHS PRIOR TO THE CLAIMED DAMAGE OR INJURY.

 

9.

General Provisions

 

9.1   Arbitration. Any controversy or claim arising out of or relating to this Agreement, or the breach thereof, shall be settled by arbitration in San Francisco, California in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. Provider agrees that Company's damages arising from any breach of this Agreement by Provider would be difficult, if not impossible, and inadequate to measure and calculate.

 

9.2   Governing Law; Venue. This Agreement and the rights and obligations of both Parties shall be governed and construed in accordance with the laws of the State of California, without giving effect to its choice of law or conflict of laws rules. Any legal action or proceeding arising under this Agreement will be brought exclusively in the federal or state courts located in the Northern District of California and the Parties hereby irrevocably consent to the personal jurisdiction and venue therein.

 

9.3  Equitable Remedies. Due to the personal and unique nature of the Services and Provider’s access to Confidential Information of Company, Company shall have the right to enforce this Agreement and any of its provisions by injunction, specific performance or other equitable relief without prejudice to any other rights and remedies that Company may have for a breach of this Agreement. Provider further agrees that no bond or other security shall be required in obtaining such equitable relief.

 

9.4   Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable, that provision of the Agreement will be enforced to the maximum extent permissible so as to affect the intent of the Parties and the validity or enforceability of the other provisions will not be affected.

 

 

 

9.5  Waiver. The waiver of any breach of any provision of this Agreement will not constitute a waiver of any subsequent breach of the same or other provisions hereof.

 

9.6  Assignment. Provider will not, and will not have the right to, assign, transfer, delegate or otherwise dispose of, this Agreement or any of Provider’s rights or obligations under this Agreement without the prior written consent of Company. Subject to the foregoing, this Agreement will be binding upon and will inure to the benefit of the Parties and their respective successors and permitted assigns.

 

9.7  Notices. Any notice, request, demand, or other communication required or permitted hereunder will be in writing, will reference this Agreement and will be deemed to be properly given: (a) when delivered personally; (b) when sent by electronic transmission including e-mail; (c) five (5) business days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) two (2) business days after deposit with a private industry overnight courier, with written confirmation of receipt. All notices will be sent to the address set forth on the signature page of this Agreement and to the notice of the person executing this Agreement (or to such other address or person as may be designated by a Party by giving written notice to the other Party pursuant to this Section).

 

9.8  Entire Agreement; Amendment. This Agreement (including the Exhibits attached hereto, which are incorporated herein by reference) are the final, complete and exclusive agreement of the Parties with respect to the subject matter hereof and supersedes and merges all prior or contemporaneous representations, discussions, proposals, negotiations, conditions, communications and agreements, whether written or oral, between the Parties relating to the subject matter hereof and all past courses of dealing or industry custom. No modification of or amendment to this Agreement will be effective unless in writing and signed by each of the Parties.

 

9.9     Counterparts. This Agreement may be executed (including, without limitation, by electronic signature) in multiple counterparts, with the same effect as if the Parties had signed the same document. Each counterpart so executed will be deemed to be an original, and all such counterparts will be construed together and will constitute one Agreement.

 

 

 

IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be duly executed as of May 13, 2020.

 

 

NOVABAY PHARMACEUTICALS, INC.

 

 

TLF BIO INNOVATION LAB LLC 

By:     /s/ Justin M. Hall                                     

By:    /s/ Lena Xiao                                      

Name: Justin M. Hall, Esq.

Name: Lena Xiao

Title: CEO and General Counsel

Title: Manager

Email: [Redacted.]

Email: [Redacted.]

Address: 2000 Powell Street, Suite 1150

Address: [Redacted.]

               Emeryville, CA 94608

 

 

 

 

EXHIBIT A

SERVICES

 

[Redacted.]

 

 

 

EXHIBIT B

CELLERX PROJECT TEAM

 

[Redacted.]

 

 

 

EXHIBIT C

ACCREDITED INVESTOR

 

[Redacted.]

 

 

 

EXHIBIT D

TRAVEL & EXPENSE POLICY

 

[Redacted.]

 

 

 

EXHIBIT E

PROFIT AND LOSS STATEMENT

 

[Redacted.]

 

 

 

Exhibit 10.2

 

 

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is effective as of May 13, 2020, between NovaBay Pharmaceuticals, Inc., a Delaware corporation (the “Company”), and TLF Bio Innovation Lab LLC, a Delaware limited liability corporation (the “Purchaser”).   

 

WHEREAS, the Purchaser and the Company intend to simultaneously enter into a Services Agreement, in which the Purchaser will provide the Company with certain services related to the re-launching and re-branding of the Company’s CelleRx product.

 

WHEREAS, in connection with the Services Agreement being entered into between the parties, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

 

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:   

 

ARTICLE I.
DEFINITIONS

 

1.1     Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings set forth in this Section 1.1:

  

Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.

  

Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close, provided that banks shall not be deemed to be authorized or required to be closed due to a “shelter in place,” “non-essential employee” or similar closure of physical branch locations at the direction of any governmental authority if such banks’ electronic funds transfer systems (including for wire transfers) are open for use by customers on such day.

 

Closing” means the closing of the purchase and sale of the Shares pursuant to Section 2.1.

 

Closing Date” means the Trading Day on which this Agreement has been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Shares, in each case, have been satisfied or waived.

 

 

 

Commission” means the United States Securities and Exchange Commission.

 

Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

   

Effective Date” means the earliest of the date that (a) all of the Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions, or (b) following the one year anniversary of the Closing Date provided that a holder of Shares is not an Affiliate of the Company, all of the Shares may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.

  

Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

  

Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

   

Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

   

Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

Shares” means the shares of Common Stock issued or issuable to the Purchaser pursuant to this Agreement.

 

Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act or any other type of hedging transaction involving the Company’s securities including, without limitation, depositing the Company’s securities with a brokerage firm where such securities are made available by the broker to other customers of the firm for purposes of hedging or short selling the Company’s securities. 

 

 

 

Subscription Amount” means, as to the Purchaser, the aggregate amount to be paid for Shares purchased hereunder as specified in Section 2.1 and below the Purchaser’s name on the signature page of this Agreement in United States dollars and in immediately available funds.

  

Trading Day” means a day on which the principal Trading Market is open for trading.

 

Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

  

Transfer Agent” means Computershare Shareholder Services, Inc., located in Providence, Rhode Island, Providence County, as the transfer agent and registrar of the Company in the United States, and Computershare Investor Services, Inc., located in Toronto, Ontario, Canada, as the co-transfer agent and registrar of the Company, and any successor transfer agent of the Company.

  

ARTICLE II.
PURCHASE AND SALE

 

2.1     Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, the Company agrees to sell, and the Purchaser agrees to purchase 1,000 shares of the Company’s Common Stock (the “Shares”). The Purchaser shall deliver to the Company, via wire transfer, immediately available funds equal to $1,030 (based on the Company’s closing stock price on May 4, 2020) (the “Subscription Amount”), and the Company shall deliver to the Purchaser its respective Shares, and the Company and the Purchaser shall deliver the other items set forth in Section 2.2 at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at a location as the parties shall mutually agree.

 

2.2     Closing Deliveries.

 

(a)     On or prior to the Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:

 

(i)     this Agreement duly executed by the Company; and

  

(ii)     a copy of the irrevocable instructions to the Transfer Agent instructing the Transfer Agent to deliver, on an expedited basis, the Shares, which shall be in either certificated or book-entry form, registered in the name of the Purchaser.

 

(b)     On or prior to the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)     this Agreement duly executed by such Purchaser; and

 

(ii)     the Subscription Amount by wire transfer to the account specified in this Agreement.

  

 

 

2.3     Closing Conditions.

 

(a)     The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

 

(i)     the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate in all material respects as of such date);

 

(ii)     all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been performed in all material respects;

 

(iii)     the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement; and

 

(iv)     no temporary restraining order, preliminary or permanent injunction or other order or decree, and no other legal restraint or prohibition, shall exist which questions the validity of this Agreement or the right of the Company or the Purchaser, as the case may be, to enter into this Agreement or prevents or could reasonably be expected to prevent the consummation of the transactions contemplated by this Agreement, nor shall any litigation or court or administrative proceeding have been commenced or threatened with respect to the foregoing.

 

(b)     The respective obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met: 

 

(i)     all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

 

(ii)     the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; and

  

(iv)     from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market (without the ability of the Company to list on another exchange or quotation system), and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on the Company that results in a material adverse effect.

  

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

  

3.1     Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

 

 

 

(a)     Authority. The Purchaser has the capacity and power to enter into and to consummate the transaction contemplated by this Agreement and otherwise carry out the obligations hereunder and thereunder. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)     Own Account. The Purchaser understands that the Shares are “restricted securities” and have not been registered under the Securities Act or any applicable state or foreign securities law and is acquiring the Shares as principal for its own account and not with a view to or for distributing or reselling such Shares or any part thereof in violation of the Securities Act or any applicable state or foreign securities law, has no present intention of distributing any of such Shares in violation of the Securities Act or any applicable state or foreign securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Shares in violation of the Securities Act or any applicable state or foreign securities law or otherwise in compliance with applicable federal, state and foreign securities laws. The Purchaser is acquiring the Shares hereunder in the ordinary course of its business.

 

(c)     Purchaser Status. At the time the Purchaser was offered the Shares, it was, and as of the date hereof it is either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.

 

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

 

(e)     General Solicitation. The Purchaser is not purchasing the Shares as a result of any advertisement, article, notice or other communication regarding the Shares published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

(f)     Access to Information. The Purchaser acknowledges that it has had the opportunity to review this Agreement (including all exhibits and schedules thereto) and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Shares; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. 

 

 

 

(g)     Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that the Purchaser first received a term sheet or oral description from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. The Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

 

(h)     Filings, Consents and Approvals. The Purchaser is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the executions, delivery and performance by the Company of this Agreement.

 

(i)     No Investment, Tax or Legal Advice. The Purchaser understands that nothing in the Company’s filings with the Commission, this Agreement, or any other materials presented to the Purchaser in connection with the purchase and sale of the Shares constitutes legal, tax or investment advice. The Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Shares.

 

ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES

 

4.1     Transfer Restrictions.

 

(a)     The Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of the Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the Purchaser or in connection with a pledge to an accredited investor as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Shares under the Securities Act. In connection with any transfer of the Shares pursuant to Rule 144 or other applicable exemption, the Company may require the transferor thereof to provide the Company with written representations providing reasonable assurance that the proposed transfer complies with the requirements of Rule 144 or other applicable exemption. As a condition of transfer, any such transferee shall (i) agree in writing to be bound by the terms of this Agreement, and (ii) if the transfer is not made (A) in accordance with Rule 144, (B) pursuant to an effective registration statement or (C) in a transfer not involving a change in beneficial ownership, make the representations set forth in Sections 3.2(b) and (c). If such conditions are satisfied, such transferee shall have the rights and obligations of the Purchaser under this Agreement.

 

 

 

(b)     The Purchaser agrees to the imprinting or making, so long as is required by this Section 4.1, of a legend or electronic notation on any of the Shares in the following form:

 

THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, OR, IN THE CASE OF AN OFFER OR SALE PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, AS EVIDENCED BY WRITTEN REPRESENTATIONS PROVIDED BY THE TRANSFEROR, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY, OF COMPLIANCE WITH SUCH RULE.

  

(c)     The Shares shall not contain any legend or electronic notation (including the legend or electronic notation set forth in Section 4.1(b) hereof), (i) following any sale of such Shares pursuant to Rule 144, (ii) if such Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Shares and without volume or manner-of-sale restrictions, or (iii) if such legend or electronic notation is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). Upon request by the Purchaser, following such time as a legend or electronic notation is no longer required under this Section 4.1(c), the Company shall cause its counsel to issue an instruction letter to the Transfer Agent promptly after the Effective Date if required by the Transfer Agent to effect the removal of the legend or electronic notation hereunder. The Company agrees that at such time as such legend or electronic notation is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the written request by the Purchaser to the Company to remove such restrictive legend or electronic notation from such Shares (which may be held in book-entry form only and not represented by a certificate at the time of such request) (such third Trading Day, the “Legend Removal Date”), deliver or cause to be delivered to the Purchaser Shares that are free from all restrictive and other legends or electronic notations by causing the Transfer Agent to credit the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by the Purchaser. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4.  

 

 

 

(d)     The Purchaser agrees with the Company that the Purchaser will sell any Shares pursuant to an exemption from the registration requirements of the Securities Act, and acknowledges that the removal of the restrictive legend or electronic notation from Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

 

4.2     Certain Transactions and Confidentiality. The Purchaser covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it, will execute any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the filing of the Form 8-K.  The Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the filing of the Form 8-K, the Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in this Agreement. 

 

ARTICLE V.
MISCELLANEOUS

 

5.1     Termination.  This Agreement may be terminated before the Closing by the Purchaser, as to the Purchaser’s obligations hereunder by written notice to the Company, if the Closing has not been consummated on or before June 1, 2020; provided, however, that such termination will not affect the right of any party to sue for any breach by any other party (or parties).

 

5.2     Fees and Expenses. Except as expressly set forth in this Agreement to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Shares to the Purchaser (other than income and capital gains taxes of the Purchaser that may be incurred in connection with the transactions contemplated hereby).

 

5.3     Entire Agreement. This Agreement, along with the Services Agreement, constitute the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

5.4     Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

 

 

 

5.5     Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser, or in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

5.6     Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

5.7     Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser (other than by merger). The Purchaser may assign any or all of its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Share, provided that such transferee agrees in writing to be bound, with respect to the transferred Shares, by the provisions of this Agreement that apply to the “Purchaser.”

 

5.8     No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

 

5.9     Governing Law; Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective affiliates, directors, officers, stockholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action or proceeding to enforce any provisions of this Agreement, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

 

 

 

5.10     Survival. The representations and warranties contained herein shall survive the delivery of the Shares in relation to the Closing.

 

5.11     Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

5.12     Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

5.13     Replacement of Shares. If any certificate or instrument evidencing any Shares is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Shares.

 

5.14     Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance under this Agreement. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in this Agreement and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

5.15     Saturdays, Sundays, Holidays, etc.     If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

 

5.16     Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise this Agreement and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

 

 

 5.17     Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

 

5.18     WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

 

 

(Signature Pages Follow)

 

 

 

COMPANY SIGNATURE PAGE TO NOVABAY PHARMACEUTICALS, INC. SECURITIES PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by its authorized signatory as of the date first indicated above.

 

 

 

NOVABAY PHARMACEUTICALS, INC.

 

 

 

 

By:

/s/ Justin Hall

 

Name:

Justin Hall

 

Title:

President, Chief Executive Officer & General Counsel

 

 

 

PURCHASER SIGNATURE PAGES TO NOVABAY PHARMACEUTICALS, INC. SECURITIES PURCHASE AGREEMENT

 

IN WITNESS WHEREOF, the undersigned executes this Securities Purchase Agreement as of the date first indicated above.

 

Name of Purchaser: TLF Bio Innovation Lab LLC

 

Signature of Purchaser: /s/ Lena Xiao

 

Email Address of Purchaser: [Redacted.]

 

Address for Notice to Purchaser: [Redacted.]
   

                                        

  

 

Subscription Amount: $ 1,030 USD  

 

Shares: 1,000  

 

 

[SIGNATURE PAGE]