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(State or Other Jurisdiction
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of Each Class
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Item 1.01
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Entry into a Material Definitive Agreement
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Item 3.02
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Unregistered Sales of Equity Securities
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Item 9.01
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Financial Statements and Exhibits.
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Description
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Cover Page Interactive Data File (embedded within the Inline XBRL document)
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| NovaBay Pharmaceuticals, Inc. | |||
| By: | /s/ Justin Hall | ||
| Justin Hall | |||
| Chief Executive Officer and General Counsel | |||
| Dated: March 25, 2024 | |||
Exhibit 4.2
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE 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”), 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 AND IN THE FIRST AMENDMENT TO SECURITY AGREEMENT, DATED AS OF MARCH 24, 2024, AS AMENDED FROM TIME TO TIME, COPIES OF WHICH ARE AVAILABLE WITH THE SECRETARY OF THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
NOVABAY PHARMACEUTICALS, INC.
SERIES D COMMON STOCK PURCHASE WARRANT
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Warrant Shares: [●] |
Issue Date: March [●], 2024 |
THIS SERIES D COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value received, [●] 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 the later of (i) the six (6) month anniversary of the Issue Date and (ii) the date immediately following the date any Stockholder Approval has been received and is effective (the “Initial Exercise Date”), and on or prior to 5:00 p.m. (New York City time) on the five year anniversary of the Initial Exercise Date (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. Unless otherwise specified, capitalized terms used and not otherwise defined herein shall have the meanings set forth in (x) that certain Securities Purchase Agreement (the “Purchase Agreement”), dated April 27, 2023, between the Company and each purchaser that is a signatory thereto and (y) the First Amendment to Security Agreement, dated as of March 24, 2024 (the “First Amendment”), as applicable; provided, however, that in the event of a conflict between the meaning set forth in the Purchase Agreement and the First Amendment, the provisions of the First Amendment shall control.
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 attached hereto as Exhibit A (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(d)(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, unless the cashless exercise procedure specified in Section 2(c) below is specified in the applicable Notice of Exercise. 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 $0.14, subject to adjustment hereunder (the “Exercise Price”).
c) Cashless Exercise. After the later of (i) the six month anniversary of the Issue Date and (ii) the date any Stockholder Approval has been received and is effective, if there is no effective registration statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:
(A) = as applicable: (i) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise if such Notice of Exercise is (1) both executed and delivered pursuant to Section 2(a) hereof on a day that is not a Trading Day or (2) both executed and delivered pursuant to Section 2(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as defined in Rule 600(b) of Regulation NMS promulgated under the federal securities laws) on such Trading Day, (ii) at the option of the Holder, either (y) the VWAP on the Trading Day immediately preceding the date of the applicable Notice of Exercise or (z) the Bid Price of the Common Stock on the principal Trading Market as reported by Bloomberg L.P. as of the time of the Holder’s execution of the applicable Notice of Exercise if such Notice of Exercise is executed during “regular trading hours” on a Trading Day and is delivered within two (2) hours thereafter (including until two (2) hours after the close of “regular trading hours” on a Trading Day) pursuant to Section 2(a) hereof or (iii) the VWAP on the date of the applicable Notice of Exercise if the date of such Notice of Exercise is a Trading Day and such Notice of Exercise is both executed and delivered pursuant to Section 2(a) hereof after the close of “regular trading hours” on such Trading Day;
(B) = the Exercise Price of this Warrant, as adjusted hereunder; and
(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.
If Warrant Shares are issued in such a cashless exercise, the parties acknowledge and agree that in accordance with Section 3(a)(9) of the Securities Act, the Warrant Shares shall take on the characteristics of the Warrants being exercised, and the holding period of the Warrant Shares being issued may be tacked on to the holding period of this Warrant. The Company agrees not to take any position contrary to this Section 2(c).
“Bid Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the bid price of the Common Stock for the time in question (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Common Stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the Common Stock are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
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d) |
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 (assuming cashless exercise of the Warrants), 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 (other than in the case of a cashless exercise) 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. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $2.50 per Trading Day (increasing to $15 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such 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.
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(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.
iv. Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise. In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares in accordance with the provisions of Section 2(d)(i) above pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder (up to the number of shares of Common Stock required to be purchased by the Holder or its broker for the Buy-In) in connection with a valid exercise, and (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.
v. 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.
vi. 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 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 as Exhibit B 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. The Company 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.
vii. 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.
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e) |
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(e), 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(e) 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. 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 (other than as a result of a Holder’s reliance on the number of issued and outstanding shares of Common Stock pursuant to this Section 2(e)). For purposes of this Section 2(e), 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 4.99% 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(e), 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(e) 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(e) 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. The limitations contained in this paragraph shall apply to a successor holder of this Warrant. |
Section 3. Certain Adjustments.
a) Stock Dividends and Splits. If the Company, at any time on or after the Issue Date 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 (x) exercise of this Warrant or any other Company warrant, (y) conversion of, or payment of interest on, the Debentures (as defined in the Purchase Agreement) or (z) conversion of, or payment of any dividend on, Company preferred stock), (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.
b) Subsequent Rights Offerings. In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, that, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
c) Pro Rata Distributions. During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, that, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).
d) 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 (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(e) 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(e) 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 thirty (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 for the same type or form of consideration (and in the same proportion), as the Black Scholes Value of the unexercised portion of the Warrant, 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(d) 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.
e) 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.
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f) |
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.
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 and to the provisions of Section (e) of Exhibit B to the First Amendment, this Warrant and all rights hereunder (including, without limitation, any registration rights) 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 as Exhibit B) 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, comply with the provisions of Section 5.7 of the Purchase Agreement.
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(d)(i), except as expressly set forth in Section 3. Without limiting any rights of a Holder to receive Warrant Shares on a “cashless exercise” pursuant to Section 2(c) or to receive cash payments pursuant to Section 2(d)(i) and Section 2(d)(iv) herein, 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).
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 Purchase Agreement.
f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, 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, the Purchase Agreement, or the First Amendment, 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.
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 in accordance with the notice provisions of the Purchase Agreement.
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.
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(Signature Page Follows)
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: Chief Executive Officer and General Counsel | ||
EXHIBIT A
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 (check applicable box):
[ ] in lawful money of the United States; or
[ ] if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).
(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 warrants that it is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended, and that the Warrant Shares issued pursuant to this Notice of Exercise will not cause the undersigned to exceed the Beneficial Ownership Limitation.
[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: |
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Dated: _________________ _____, ___________ |
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Holder’s Signature: |
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Holder’s Address: |
Exhibit 4.3
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE U.S. 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. THIS SECURITY AND THE SECURITIES ISSUABLE UPON CONVERSION OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.
Original Issue Date: March [●], 2024
Original Conversion Price (subject to adjustment herein): $0.14
$[●]
UNSECURED CONVERTIBLE NOTE
DUE MARCH [●], 2026
THIS UNSECURED CONVERTIBLE NOTE is one of a series of duly authorized and validly issued Unsecured Convertible Note of NovaBay Pharmaceuticals, Inc., a Delaware corporation (the “Company”), having its principal place of business at 2000 Powell Street, Suite 1150, Emeryville, CA 94608, designated as its Unsecured Convertible Note, due March [●], 2026 (the “Note”). This Note has been issued pursuant to the First Amendment to the Security Agreement, dated March 24, 2024 (“First Amendment”) and is subject to certain investment representations of the Holder set forth in the First Amendment.
FOR VALUE RECEIVED, the Company promises to pay to [●] or its permitted registered assigns (the “Holder”), or shall have paid pursuant to the terms hereunder, the principal sum of US$[●] (as reduced by any prepayments of principal or conversions of principal, the “Principal Amount”) on March [●], 2026 (the “Maturity Date”) or such earlier date as this Note is required or permitted to be repaid as provided hereunder. This Note is subject to the following additional provisions:
Section 1. Interest. There shall not be any interest due and/or payable on the Principal Amount of this Note. Accordingly, there shall be no interest payments made by the Company to the Holder pursuant to this Note.
Section 2. Principal Amount and Redemption. The Company will pay the Principal Amount on the Maturity Date, provided, however, that in the event that the Company is not able to obtain the Stockholder Approval on or before the six (6) month anniversary of the Original Issue Date (the “Stockholder Approval Deadline”), then the obligation to pay the Note shall accelerate and be payable by the Company to the Holder promptly after the Stockholder Approval Deadline. All or any portion of this Note may be prepaid at any time and from time to time by the Company without penalty.
Section 3. Method of Payment. Unless otherwise converted as provided in Section 4 below, the Principal Amount of this Note is payable in United States dollars at the address of the Holder appearing on the signature page hereof, as the same may be updated by the Holder by written notice from time to time. Payments may be made by check to the address of the Holder or by wire transfer to an account designated in writing by the Holder.
Section 4. Conversion.
(a) Voluntary Conversion. Until the full Principal Amount has been paid to the Holder, this Note shall be convertible, in whole or in part, into shares (“Conversion Shares”) of Company common stock, par value $0.01 per share (“Common Stock”) at the option of the Holder, at any time and from time to time only on or after the Conversion Date (subject to the conversion limitation set forth in Section 4(d)). The “Conversion Date” is the date that the Company obtains stockholder approval to permit the conversion of up to the full amount of the Principal Amount into Conversion Shares as provided herein, including as may be required by the applicable rules and regulations of the NYSE American LLC (or any successor entity) (the “Stockholder Approval”). The Holder shall effect conversions by delivering to the Company a Notice of Conversion, the form of which is attached hereto as Annex A (each, a “Notice of Conversion”), specifying therein the Principal Amount to be converted and the date on which such conversion shall be effected, which date may not be prior to the date the Holder delivers such Notice of Conversion to the Company (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. To effect conversions hereunder, the Holder shall not be required to physically surrender this Note to the Company unless the entire Principal Amount has been so converted in which case the Holder shall surrender this Note as promptly as is reasonably practicable after such conversion without delaying the Company’s obligation to deliver the shares on the Share Delivery Date. Conversions hereunder shall have the effect of lowering the outstanding Principal Amount in an amount equal to the applicable conversion. The Holder and the Company shall maintain records showing the Principal Amount(s) converted and the date of such conversion(s) and the remaining Principal Amount that is outstanding under the Note after such conversion(s). The portion or all of the Note converted into shares of Common Stock or prepaid in accordance with the terms hereof (regardless of delivery of the Note) shall be deemed paid to the Holder and reduce the amounts owned by the Company under this Note. The Company may deliver an objection to any Notice of Conversion within one (1) business day of delivery of such Notice of Conversion. For purposes of this Note, “business day” means any day that is not a Saturday, Sunday, or other day on which commercial banks in the City of New York, New York are required by law to be closed. The Holder, and any assignee by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted Principal Amount of this Note may be less than the amount stated on the face hereof.
(b) Conversion Price. The conversion price in effect on any Conversion Date shall be equal to $0.14, subject to adjustment herein (as equitably adjusted to reflect subsequent stock dividends, stock splits, combinations or recapitalizations, the “Conversion Price”).
(c) Mechanics of Conversion.
(i) Conversion Shares Issuable Upon Conversion of Principal Amount. The number of Conversion Shares issuable upon a conversion hereunder shall be determined by the quotient obtained by dividing (x) the outstanding Principal Amount to be converted by (y) the Conversion Price.
(ii) Delivery of Conversion Shares Upon Conversion. Not later than three (3) business days after receipt of the Conversion Notice (the “Share Delivery Date”), the Company shall deliver, or cause to be delivered, to the Holder the Conversion Shares, which the Company and the Holder acknowledge and agree are subject to the transfer restrictions and obligations, as well as registration rights set forth in the First Amendment.
(iii) Failure to Deliver Conversion Shares. If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Company at any time on or before its receipt of such Conversion Shares, to rescind such conversion, in which event the Company shall promptly return to the Holder any original Note delivered to the Company and the Holder shall promptly return to the Company the Conversion Shares issued to such Holder pursuant to the rescinded Notice of Conversion.
(iv) Reservation of Shares Issuable Upon Conversion. The Company covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of this Note, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the Holder, not less than such aggregate number of shares of the Common Stock as shall be issuable (taking into account, if applicable, adjustments to reflect subsequent stock dividends, stock splits, combinations or recapitalizations) upon the conversion of the then outstanding Principal Amount. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable.
(v) Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the conversion of this Note. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, 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 Conversion Price or round up to the next whole share.
(vi) Transfer Taxes and Expenses. The issuance of Conversion Shares on conversion of this Note shall be made without charge to the Holder hereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Company shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holder of this Note so converted and the Company shall not be required to issue or deliver such Conversion Shares unless or until the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.
(d) Holder’s Conversion Limitations. The Company shall not effect any conversion of this Note, and a Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to the conversion set forth on the applicable Notice of Conversion, 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 Affiliates and Attribution Parties shall include the number of shares of Common Stock issuable upon conversion of this Note 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) conversion of the remaining, unconverted principal amount of this Note beneficially owned by the Holder or any of its Affiliates or Attribution Parties and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, any other convertible debt or equity securities of the Company or warrants) beneficially owned by the Holder or any of its Affiliates or Attribution Parties. Except as set forth in the preceding sentence, for purposes of this Section 4(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 4(d) applies, the determination of whether this Note is convertible (in relation to other securities owned by the Holder together with any Affiliates and Attribution Parties) and of which principal amount of this Note is convertible shall be in the sole discretion of the Holder, and the submission of a Notice of Conversion shall be deemed to be the Holder’s good faith determination of whether this Note may be converted (in relation to other securities owned by the Holder together with any Affiliates or Attribution Parties) and which principal amount of this Note is convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Company each time it delivers a Notice of Conversion that such Notice of Conversion is in compliance with the restrictions set forth in Section 4 of the Note, and the Company shall have no obligation to verify or confirm the accuracy of such determination and shall have no liability to the Holder for any such conversions of the Note that are not in compliance with the Beneficial Ownership Limitation (other than as a result of a Holder’s reliance on the number of issued and outstanding shares of Common Stock pursuant to this Section 4(d)). 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. For purposes of this Section 4(d), in determining the number of outstanding shares of Common Stock, the 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 U.S. Securities and Exchange 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 Company’s transfer agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within one 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 Note, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of this Note by the Holder. The Holder, upon written notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 4(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 conversion of this Note held by the Holder and the Beneficial Ownership Limitation provisions of this Section 4(d) shall continue to apply. Any increase in the Beneficial Ownership Limitation will not be effective until the 61st day after such notice is delivered to the Company. The Beneficial Ownership Limitation provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Note.
Section 5. Unsecured Obligation. This Note and the Principal Amount payable hereunder is an unsecured obligation of the Company.
Section 6. Events of Default. If more than one of the following described “Events of Default” shall occur:
|
(a) |
the Company shall fail to pay all of the Principal Amount on the Maturity Date that is not cured within ten (10) business days; or |
|
(b) |
the Company shall fail to perform or observe any other covenant, provision, condition, agreement or obligation of the Company under this Note and such failure shall continue uncured for a period of twenty (20) days after notice from the Holder of such failure; or |
|
(c) |
the Company shall make an assignment for the benefit of creditors or commence proceedings for its dissolution; or apply for or consent to the appointment of a trustee, liquidator or receiver for it or for a substantial part of its property or business; or |
|
(d) |
a trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or |
|
(e) |
any governmental authority or any court of competent jurisdiction at the instance of any governmental authority shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company and shall not be dismissed within thirty (30) days thereafter; or |
|
(f) |
bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company and if instituted against the Company, shall not be dismissed, stayed or bonded within sixty (60) days after such institution or the Company shall by any action or answer approve of, consent to, or acquiesce in any such proceedings or admit the material allegations of, or default in answering a petition filed in any such proceeding; |
then, or at any time thereafter, and in each and in every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default), the Holder may consider this Note immediately due or payable, without presentment, demand, protest or notice of any kind, all of which are expressly waived, anything herein or other instruments contained to the contrary notwithstanding, and the Holder may immediately demand without expiration of any period of grace, enforce any and all of the Holder’s rights and remedies provided herein or any other rights or remedies afforded by law.
Section 7. Miscellaneous.
(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holder hereunder, including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by email attachment, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address set forth above, or such other email address, or address as the Company may specify for such purposes by notice to the Holder delivered in accordance with this Section 7(a). Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, by email attachment, or sent by a nationally recognized overnight courier service addressed to each Holder at the email address or address of the Holder appearing on the books of the Company, or if no such email attachment or address appears on the books of the Company, at the principal place of business of such Holder, as provided in the First Amendment. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via email attachment to the email address set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on any date, (ii) the next business day after the date of transmission, if such notice or communication is delivered via email attachment to the email address set forth on the signature pages attached hereto on a day that is not a business day or later than 5:30 p.m. (New York City time) on any business day, (iii) the second business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given.
(b) Unsecured Obligation; Cancellation. This Note is a direct unsecured debt obligation of the Company. Upon the indefeasible repayment by the Company of all of its obligations hereunder to the Holder, including, without limitation, the principal amount of this Note, the indebtedness evidenced hereby shall be deemed canceled and paid in full, and the Holder shall promptly surrender the Note to the Company, which shall be destroyed.
(c) Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed Note, a new Note for the principal amount of this Note so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonably satisfactory to the Company.
(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Note 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 conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by the Note, the First Amendment and other transaction documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Note, the First Amendment and other transaction documents), 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 such New York Courts, or such New York Courts are improper or 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 Note 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 applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Note or the transactions contemplated hereby.
(e) Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note on any other occasion. Any waiver by the Company or the Holder must be in writing.
(f) Severability. If any provision of this Note is invalid, illegal or unenforceable, such provision shall be adjusted rather than voided, if possible, so that its enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected impaired thereby.
(g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a business day, such payment shall be made on the next succeeding business day.
(h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Note and shall not be deemed to limit or affect any of the provisions hereof.
Section 8. Disclosure. Upon receipt or delivery by the Company of any notice in accordance with the terms of this Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, nonpublic information relating to the Company or its subsidiaries, the Company shall within two (2) business days after such receipt or delivery publicly disclose such material, nonpublic information on a Current Report on Form 8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company or its subsidiaries, the Company so shall indicate to the Holder contemporaneously with delivery of such notice, and in the absence of any such indication, the Holder shall be allowed to presume that all matters relating to such notice do not constitute material, nonpublic information relating to the Company or its subsidiaries.
*********************
(Signature Page Follows)
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of the date first above indicated.
| NOVABAY PHARMACEUTICALS, INC. | |||
| By: | |||
| Name: Justin M. Hall | |||
| Title: Chief Executive Officer and General Counsel | |||
ANNEX A
NOTICE OF CONVERSION
The undersigned hereby elects to convert principal under the Convertible Unsecured Note due March [●], 2026 of NovaBay Pharmaceuticals, Inc., a Delaware corporation (the “Company”), into shares of common stock, par value $0.01 per share (the “Common Stock”), of the Company according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged to the holder for any conversion, except for such transfer taxes, if any.
By the delivery of this Notice of Conversion the undersigned represents and warrants to the Company that its ownership of the Common Stock does not exceed the amounts specified under Section 4 of this Note, as determined in accordance with Section 13(d) of the Exchange Act.
The undersigned agrees to comply with the prospectus delivery requirements under the applicable securities laws in connection with any transfer of the aforesaid shares of Common Stock.
Conversion calculations:
| Date to Effect Conversion: | |
| Principal Amount of Note to be Converted: | |
| Number of shares of Common Stock to be issued: | |
| Signature: | |
| Name: | |
| Address for Delivery of Common Stock Certificates: | |
| Or | |
| DWAC Instructions: | |
| Broker No: | |
| Account No: |
Exhibit 10.3
FIRST AMENDMENT TO SECURITY AGREEMENT
This FIRST AMENDMENT TO SECURITY AGREEMENT (this “Amendment”) is made and entered into as of March 24, 2024, by and among NovaBay Pharmaceuticals, Inc., a Delaware corporation (the “Company”), DERMAdoctor, LLC, a Missouri limited liability company (“DERMAdoctor”, and together with the Company, the “Debtors”), and the holders of the Company’s Original Issue Discount Senior Secured Convertible Debentures in the original aggregate principal amount of $3.3 million (collectively, the “Debentures”) signatory hereto (collectively, the “Purchasers” or the “Secured Parties”).
WHEREAS, reference is made to that certain Securities Purchase Agreement, dated as of April 27, 2023, between the Company and the Purchasers (the “Purchase Agreement”), pursuant to which the Company agreed to sell and issue to the Purchasers, and the Purchasers agreed to purchase from the Company, the Debentures, subject to the terms and conditions set forth therein;
WHEREAS, as a condition precedent under the Purchase Agreement, DERMAdoctor executed and delivered the Subsidiary Guarantee dated as of April 27, 2023 in favor of the Purchasers (as renewed, reaffirmed, extended, supplemented and amended, the “Subsidiary Guarantee”), pursuant to which DERMAdoctor agreed to guarantee to the Purchasers and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance when due of all of the liabilities and obligations due or to become due of the Company or any Guarantor (as defined therein) to the Purchasers;
WHEREAS, in connection with the Purchase Agreement and the Subsidiary Guarantee, the Company, DERMAdoctor, and the Secured Parties entered into that certain Security Agreement dated as of April 27, 2023 (as renewed, reaffirmed, extended, supplemented and amended, the “Security Agreement”), pursuant to which the Company and DERMAdoctor granted to the Secured Parties security interests in certain collateral described therein;
WHEREAS, the Company entered into that Membership Unit Purchase Agreement, dated as of March 12, 2024 (the “MUPA”), among the Company, as the seller, New Age Investments LLC, a Florida limited liability company, as the buyer (the “Buyer”), and DERMAdoctor, pursuant to which the Company will sell and Buyer will purchase 100% of the membership units of DERMAdoctor (the “Sale Transaction”);
WHEREAS, pursuant to the MUPA, the closing of the Sale Transaction is conditioned upon the Company obtaining the consent of the Purchasers to: (i) amend the Security Agreement, as provided in this Amendment; and (ii) release DERMAdoctor from its obligations under the Subsidiary Guarantee and corresponding termination of the Subsidiary Guarantee, as provided by the Consent and Release with the Company, dated as of the date hereof (the “Consent and Release”);
WHEREAS, in consideration of the Purchasers taking the necessary actions to contemporaneously execute and deliver this Amendment and the Consent and Release to the Company to satisfy the above referenced closing condition under the MUPA, the Company offered two forms of consideration to each Purchaser, and, in accordance with the election by each Purchaser, will issue either (i) a new Series D warrant (“New Warrant”), in the form attached hereto as Exhibit A, exercisable for shares of Company common stock, par value $0.01 per share (“Common Stock”) or (ii) a new unsecured convertible note (“Unsecured Convertible Note” and, together with the Warrants, the “Consent Consideration”), in the form attached hereto as Exhibit B, convertible for shares of Common Stock, which Consent Consideration shall be issued promptly upon both this Amendment and the Consent and Release becoming automatically effective upon the closing of the Sale Transaction, as provided in this Amendment;
WHEREAS, the Debtors and the Purchasers desire to amend the Security Agreement as more particularly set forth in this Amendment and the Purchasers each desire to enter into the Consent and Release contemporaneously with the execution and delivery of this Amendment, which shall be delivered to the Company contemporaneously with the execution and delivery of this Amendment;
WHEREAS, Section 19(c) of the Security Agreement provides that no provision therein may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Debtors and the Secured Parties holding 50.1% or more of the principal amount of Debentures then outstanding; and
WHEREAS, capitalized terms used herein and not otherwise defined shall have the meanings as set forth in the Security Agreement.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and conditions set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Effective automatically as of the closing of the Sale Transaction (the “Effective Time”), the Security Agreement (including its schedules) is hereby irrevocably amended as follows:
|
(a) |
The Purchasers hereby release and discharge DERMAdoctor from any and all liability, covenant, or obligation (whether actual, contingent, sole, joint and/or several or otherwise) under the Security Agreement, together with any other sums, liabilities or obligations that may become due and payable by DERMAdoctor pursuant to the Purchase Agreement, the Debentures or any other document or instrument evidencing, securing or pertaining to, any indebtedness of the Company or DERMAdoctor, as the case may be, to the Purchasers that arise under or are in connection with the Debentures or the other Transaction Documents (as defined in the Purchase Agreement). As of the Effective Time, DERMAdoctor shall no longer be a Debtor under the Security Agreement and DERMAdoctor shall have no further liability or obligation to any of the Purchasers under the Security Agreement, the Purchase Agreement or any of the other Transaction Documents. |
|
(b) |
Schedule A of the Security Agreement is hereby amended by deleting “(2) 4346 Belgium Boulevard, Building 2, Riverside, Missouri 64150 (principal place of business of DERMAdoctor, LLC)” in its entirety. |
|
(c) |
Schedule D of the Security Agreement is hereby amended by deleting “(2) DERMAdoctor, LLC is organized under the laws of the State of Missouri (LC001472275).” in its entirety. |
|
(d) |
Schedule F of the Security Agreement is hereby amended by deleting “https://www.dermadoctor.com/” under the heading of “Domain Names” in its entirety. |
|
(e) |
Schedule H of the Security Agreement is hereby amended by deleting “(1) The Company owns all membership interests of DERMAdoctor, LLC” in its entirety and inserting “None” in its place. For the avoidance of doubt, as of the Effective Time and thereafter, “Collateral” under the Security Agreement shall exclude DERMAdoctor in its entirety, including all of its membership units and equity interests, its entire business, properties (owned, leased, investment or otherwise) and all other assets of any kind or nature now or hereafter acquired. |
|
2. |
Consent Consideration; Purchaser Consent to Issuance. |
|
(a) |
As payment of consideration to each Purchaser that duly and validly executes and delivers this Amendment and the Consent and Release and only upon the closing of the Sale Transaction occurring, the Company will issue to each Purchaser, instead of a cash payment, the type of Consent Consideration that each Purchaser elected to receive upon entering into this Agreement (as set forth on Schedule 1 to this Agreement), within two (2) business days after the Effective Time, which election was either: |
|
(i) |
a New Warrant, in the form attached to this Amendment as Exhibit A, to purchase up to the number of shares of Common Stock as specified on Schedule 1 next to the Purchaser(s) that elected to receive this type of Consent Consideration; or |
|
(ii) |
an Unsecured Convertible Note, in the form attached to this Amendment as Exhibit B, having a principal amount as set forth on Schedule 1 next to the Purchaser(s) that elected to receive this type of Consent Consideration. |
For avoidance of doubt, the Purchasers were entitled to elect and receive only one type of Consent Consideration, which election is reflected and set forth on Schedule 1 to this Agreement, and such Consent Consideration shall be issued to the Purchaser only if the Sale Transaction closes.
|
(b) |
The New Warrants issued to the applicable Purchaser(s) as set forth on Schedule 1 shall: (i) initially be exercisable on the later to occur of (A) the six (6) month anniversary of the date the New Warrants are issued to the Purchaser and (B) the date immediately following the date that the Company receives stockholder approval to permit the exercise of the New Warrants into shares of Common Stock issuable upon exercise of the New Warrants (the “Warrant Shares”), including as may be required by the rules of the NYSE American (the “Stockholder Approval”), and is effective (ii) have a term of exercise of five (5) years from the date the New Warrants become exercisable; and (iii) have an exercise price of $0.14. |
|
(c) |
The Unsecured Convertible Notes issued to the applicable Purchaser(s) as set forth on Schedule 1 shall: (i) initially be convertible on the Conversion Date (as provided in the Unsecured Convertible Notes) (ii) have a term of two (2) years from the date the Unsecured Convertible Notes are issued to the Purchaser; (iii) have a conversion price of $0.14; and (iv) be unsecured obligations of the Company. |
|
(d) |
Upon entering into this Amendment and at the time the Consent Consideration is issued and accepted at the Effective Time, each Purchaser, severally, hereby makes each of the representations and warranties as set forth in Section 3.2(a) through (g) of the Purchase Agreement to the Company with such representations and warranties being deemed to be updated to refer to and provide for the Amendment, the Consent and Release and the contemplated issuance of the Consent Consideration (as deemed updated, the “Purchaser Representations”). Each Purchaser hereby acknowledges and agrees that the Company shall be entitled to rely upon the Purchaser Representations made by such Purchaser in connection with the issuance of the Consent Consideration. Additionally, the Company hereby makes the representations and warranties to the Purchasers, and each of the Company and each Purchaser, severally, hereby acknowledge and agree to the covenants set forth on Exhibit C attached hereto. |
|
(e) |
Each Purchaser upon execution of this Amendment, does hereby consent to the issuance of the Consent Consideration as provided herein and under the terms of the Debentures (including Sections 7 and 8) and the other Transaction Documents. Each Purchaser expressly acknowledges and agrees that (i) the issuance of the Consent Consideration, in type and/or the amounts set forth on Schedule 1 to this Agreement and on terms and conditions as set forth herein and in the New Warrant and the Unsecured Convertible Note, does not and will not constitute a “Subsequent Financing” and, as such, will not result in “Mandatory Redemption Proceeds” as provided in Section 6(d) of the Debentures and (ii) any acceleration of the Unsecured Convertible Note as a result of the Company not obtaining stockholder approval for the issuance of the Conversion Shares, as provided in the Unsecured Convertible Note, will not be an “Event of Default” or violation of any term, condition or covenant under the Debentures and/or any other Transaction Documents. Each Purchaser’s agreement with this Section 2(e) is relied upon by the Company to issue the Consent Consideration as provided herein. |
3. Security Agreement. Except as otherwise expressly provided in this Amendment, the Security Agreement is and shall remain in full force and effect.
4. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Amendment 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.
5. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute but one agreement, binding on all parties hereto, notwithstanding that all parties are not signatories to the same counterparts.
6. Binding Effect. This Amendment is binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.
7. Further Assurances.
(a) The Purchasers agree to deliver to DERMAdoctor or its designees all pledged shares, certificates and any other similar collateral previously delivered in physical form by the Company or DERMAdoctor to the Purchasers under the Security Agreement.
(b) After the Effective Time, each of the Purchasers further agrees to execute and deliver any Lien release (including UCC termination statements), notice of termination of deposit account control agreement, mortgage releases, re-assignments of trademarks and copyrights, discharges of security interests, and other similar discharge or release documents (and, if applicable, in recordable form) as are reasonably necessary to release or terminate as of record, the security interests, and all other notices of security interests and Liens previously filed by or on behalf of the Purchasers against DERMAdoctor respecting the collateral to be released herein and the removal of DERMAdoctor from the Security Agreement and the other Transaction Documents as provided herein.
(c) On or any time after the Effective Time, the Company and DERMAdoctor and their counsel and their designees are hereby authorized by each Purchaser to file termination, amendment, and release documents evidencing the release of such liens, including without limitation any UCC financing statements in favor of the Purchasers respecting the collateral to be released herein as provided in this Amendment.
(d) The Purchasers shall perform such other actions reasonably requested by the Company and DERMAdoctor to effect the release contemplated herein, including delivery of certificates, securities and instruments, and the irrevocable stock power executed in blank with respect to such certificates.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties have executed this First Amendment to Security Agreement as of the date first set forth at the beginning hereof.
| COMPANY: | ||
| NOVABAY PHARMACEUTICALS, INC. | ||
| By: | ||
| Name: | ||
| Title: | ||
| DERMADOCTOR: | ||
| DERMADOCTOR, LLC | ||
| By: | ||
| Name: | ||
| Title: | ||
Signature Page to First Amendment to Security Agreement
| SECURED PARTIES: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
| [●] | ||
| By: | ||
| Name: | ||
| Title: | ||
SCHEDULE 1
CONSENT CONSIDERATION
|
Name of Secured Party |
Form of Consent Consideration |
Number of Shares of Common Stock Underlying New Warrant |
Principal Amount of Unsecured Convertible Note (U.S. Dollars) |
| [●] | [●] | [●] | [●] |
| [●] | [●] | [●] | [●] |
| [●] | [●] | [●] | [●] |
| [●] | [●] | [●] | [●] |
| [●] | [●] | [●] | [●] |
EXHIBIT A
FORM OF NEW WARRANT
See Exhibit 4.2 of the Form 8-K filed by the Company with the Securities and Exchange Commission on March 25, 2024, which is incorporated herein by reference.
EXHIBIT B
FORM OF UNSECURED CONVERTIBLE NOTE
See Exhibit 4.3 of the Form 8-K filed by the Company with the Securities and Exchange Commission on March 25, 2024, which is incorporated herein by reference.
EXHIBIT C
Representations, Warranties and Covenants
Representations, Warranties and Covenants. The Company hereby makes the following representations and warranties to each Purchaser in paragraphs (a) through (d) below, and each of the Company and each Purchaser, as the case may be, acknowledge and agree to the covenants set forth in (e) through (g) below:
(a) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Amendment and to otherwise carry out its obligations hereunder and thereunder. The execution and delivery of this Amendment and the consummation by the Company and DERMAdoctor of the transactions contemplated hereby will be duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith, other than the approval of Company stockholders for the exercise of the New Warrants and the conversion of the Unsecured Convertible Note. This Amendment has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company 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) No Conflicts. The Company’s execution, delivery and performance of this Amendment and the consummation of the transactions contemplated hereby do not and will not: (i) conflict with or violate any provision of the Company’s certificate of incorporation, bylaws or other organizational or charter documents; or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any lien upon any of the properties or assets of the Company in connection with, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any material agreement, credit facility, debt or other material instrument (evidencing Company debt or otherwise) or other material understanding to which such Company is a party or by which any property or asset of the Company is bound or affected, other than for which a waiver has been obtained by the Company; or (iii) conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have reasonably be expected to result in a Material Adverse Effect.
(c) NYSE American Corporate Governance. The transactions contemplated under this Amendment comply with all applicable rules of the NYSE American LLC.
(d) Issuance of the Consent Consideration. The issuance of the Consent Consideration as provided by Section 2 of the Amendment will be duly authorized and will be duly and validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company other than restrictions on transfer, exercise and/or conversion as provided in this Amendment and the New Warrant or the Unsecured Convertible Note, as the case may be, and the Warrant Shares and the shares of Common Stock upon conversion of the Unsecured Convertible Notes (the “Conversion Shares” and, together with the Warrant Shares, the “Underlying Shares”), when issued in accordance with the terms of the New Warrants or the Unsecured Convertible Notes, as the case may be, will be validly issued, fully paid and nonassessable, free and clear of all liens imposed by the Company other than restrictions on transfer as provided in this Amendment and the Unsecured Convertible Note. The Company shall have reserved from its duly authorized capital stock a number of shares of Common Stock for future issuance of the Underlying Shares in full in accordance with the New Warrants or the Unsecured Convertible Notes.
(e) Legends and Transfer Restrictions.
(i) The New Warrants, the Unsecured Convertible Notes and the Underlying Shares may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of any New Warrants, Unsecured Convertible Notes or Underlying Shares other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of the undersigned or in connection with a pledge, 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 New Warrants, Unsecured Convertible Notes and Underlying Shares under the Securities Act of 1933, as amended (the “Securities Act”). As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Amendment.
(ii) The undersigned agrees to the imprinting, so long as is required by this Section (e) or as required by the applicable Consent Consideration, of a legend on any of the New Warrants, Unsecured Convertible Notes and Underlying Shares in the following form:
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE 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”), 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 AND IN THE FIRST AMENDMENT TO SECURITY AGREEMENT, DATED MARCH 24, 2024, AS MAY BE AMENDED FROM TIME TO TIME, COPIES OF WHICH ARE AVAILABLE WITH THE SECRETARY OF THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(A) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that the undersigned may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the New Warrants or Unsecured Convertible Notes, as the case may be, to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Amendment and, if required under the terms of such arrangement, the undersigned may transfer pledged or secured New Warrants or Unsecured Convertible Notes, as the case may be, to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate undersigned’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of the New Warrants or Unsecured Convertible Notes, as the case may be, may reasonably request in connection with a pledge or transfer of the New Warrants, the Unsecured Convertible Notes or Underlying Shares.
(iii) Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section (e)(ii) hereof), (a) if a registration statement covering the resale of such security is effective under the Securities Act, (b) following any sale of such Underlying Shares pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule 144 without volume or manner-of-sale limitations pursuant to Rule 144, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the U.S. Securities and Exchange Commission (the “Commission”)). The Company shall cause its counsel to issue a legal opinion to its transfer agent (if required by the transfer agent) and the undersigned (if requested by the undersigned) in connection with the removal of the legend hereunder. If all or any portion of the New Warrants or the Unsecured Convertible Notes is exercised or converted, as the case may be, at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall be issued free of all legends. 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 (f). Certificates for Underlying Shares subject to legend removal hereunder shall be transmitted by the transfer agent to the undersigned by crediting the account of the undersigned’s prime broker with the Depository Trust Company System as directed by the undersigned. “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days (as defined in the Purchase Agreement), on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing Underlying Shares issued with a restrictive legend.
(f) Listing of Common Stock. The Company shall, subject to applicable requirements of the NYSE American, apply to list or quote all of the Underlying Shares on the NYSE American and secure the listing of all of the Underlying Shares on such NYSE American.
(g) Registration Statement.
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(i) |
The Company shall prepare and file with the Commission a registration statement relating to the resale of the Underlying Shares by the holders of the Consent Consideration under the Securities Act on or before the 60th calendar day following (i) in the case of the New Warrants, the date Stockholder Approval is deemed effective or (ii) in the case of the Unsecured Convertible Notes, the Conversion Date (as defined in the Unsecured Convertible Note), and use commercially reasonable best efforts to cause such registration statement to be declared effective by the Commission as soon as practical thereafter (the “Filing Date”), the Company shall file a registration statement on Form S-1 providing for the resale of the Underlying Shares by the holders of the Consent Consideration (the “Resale Registration Statement”). The Company shall use best efforts to cause the Resale Registration Statement to become effective within 60 calendar days following the Filing Date (or, in the event of a “full review” by the Commission, the 90th calendar day following the Filing Date) (the “Effectiveness Date”) and to keep the Resale Registration Statement effective at all times until either (A) no Purchaser owns any Consent Consideration or Underlying Shares or (B) the Underlying Shares become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Company’s transfer agent (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any affiliate of the Company), as reasonably determined by the Company, upon the advice of counsel to the Company. To allow for the Company to prepare and file the Resale Registration Statement by the Filing Date and to be declared effective by the Effectiveness Date, each holder of the Consent Consideration or Underlying Shares agrees to furnish to the Company such information about such holder and its ownership of Company securities as may be reasonably requested by the Company and is necessary for purposes of complying with requirements under applicable securities laws and regulations or rules of any applicable stock exchange where the Common Stock is then listed. |
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(ii) |
If: (i) the Resale Registration Statement is not filed on or prior to its Filing Date, or (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within twenty (20) calendar days after the receipt of comments by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared effective, or (iv) a Registration Statement registering for resale all of the Underlying Shares is not declared effective by the Commission by the Effectiveness Date of the Registration Statement (provided that, if the Registration Statement does not allow for the resale of the Underlying Shares at prevailing market prices (i.e., only allows for fixed price sales), the Company shall have been deemed to have not satisfied this clause) or (v) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Underlying Shares included in such Registration Statement, or the Purchasers are otherwise not permitted to utilize the Prospectus therein to resell such Underlying Shares, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which need not be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as an “Event”, and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such twenty (20) calendar day period is exceeded, and for purpose of clause (v) the date on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as “Event Date”), then, in addition to any other rights the Purchasers may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Purchaser an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 1.0% multiplied by the unpaid principal amount of their Debenture at the time such Event occurs. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Purchaser, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event. |
Exhibit 10.4
CONSENT AND RELEASE
THIS CONSENT AND RELEASE (this “Consent and Release”) is entered into as of March 24, 2024 by the purchasers signatory hereto (collectively, the “Purchasers”), in favor of DERMAdoctor, LLC, a Missouri limited liability company (“DERMAdoctor”), as a guarantor party to that certain Subsidiary Guarantee dated as of April 27, 2023 made by DERMAdoctor and the other Guarantors (if any and as defined therein) in favor of the Purchasers (as renewed, reaffirmed, extended, supplemented and amended, the “Subsidiary Guarantee”).
WHEREAS, reference is made to that certain Securities Purchase Agreement, dated as of April 27, 2023, between NovaBay Pharmaceuticals, Inc., a Delaware corporation (the “Company”) and the Purchasers (the “Purchase Agreement”), pursuant to which the Company agreed to sell and issue to the Purchasers, and the Purchasers agreed to purchase from the Company, the Debentures (as defined therein), subject to the terms and conditions set forth therein;
WHEREAS, as a condition precedent under the Purchase Agreement, DERMAdoctor executed and delivered the Subsidiary Guarantee to guarantee to the Purchasers and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance when due of all of the liabilities and obligations due or to become due of the Company or any Guarantor to the Purchasers;
WHEREAS, the Company entered into that Membership Unit Purchase Agreement, dated as of March 12, 2024 (the “MUPA”), among the Company, as the seller, New Age Investments LLC, a Florida limited liability company, as the buyer (the “Buyer”), and DERMAdoctor, pursuant to which the Company will sell, and Buyer will purchase, 100% of the membership units of DERMAdoctor (the “Sale Transaction”);
WHEREAS, pursuant to the MUPA, the closing of the Sale Transaction is conditioned upon the Company obtaining the consent of the Purchasers to (i) release DERMAdoctor from its obligations under and terminate the Subsidiary Guarantee as provided in this Consent and Release and (ii) amend that certain Security Agreement dated as of April 27, 2023 (as renewed, reaffirmed, extended, supplemented and amended, the “Security Agreement”), pursuant to which the Company and DERMAdoctor granted to the Purchasers security interests in certain collateral of DERMAdoctor described in the Security Agreement (the “Amendment”);
WHEREAS, in consideration of the Purchasers taking the necessary actions to contemporaneously execute and deliver this Consent and Release and the Amendment to the Company to satisfy the above referenced closing condition under the MUPA, the Company offered two forms of consideration to each Purchaser, and, in accordance with the election by each Purchaser, will issue, instead of a cash payment, either (i) a new Series D warrant exercisable for shares of Company common stock, par value $0.01 per share (“Common Stock”) or (ii) a new unsecured convertible note convertible for shares of Common Stock, which, in each case, shall be issued promptly following the Amendment and this Consent and Release both becoming automatically effective upon the closing of the Sale Transaction as provided in the Amendment;
WHEREAS, the Purchasers have agreed to enter into this Consent and Release to evidence their consent to the Sale Transaction, the release of DERMAdoctor from its obligations under the Subsidiary Guarantee and the termination of the Subsidiary Guarantee, all pursuant to the terms and conditions hereinafter set forth; and
WHEREAS, capitalized terms used herein and not otherwise defined shall have the meanings as set forth in the Purchase Agreement.
NOW, THEREFORE, the Purchasers hereby agree as follows:
1. Consent to Sale Transaction. Notwithstanding anything that may be to the contrary in the Purchase Agreement, the Debentures, the Subsidiary Guarantee, or any other Transaction Document (as defined in the Purchase Agreement), the Purchasers hereby consent to the Sale Transaction.
2. Release of Guarantor. Effective automatically as of the closing of the Sale Transaction (the “Effective Time”), the Purchasers each hereby irrevocably release and forever discharge DERMAdoctor from any and all liability or obligation as a Guarantor under the Subsidiary Guarantee, together with any other sums, liabilities or obligations which may become due and payable by DERMAdoctor pursuant to the Purchase Agreement, the Debenture, the Subsidiary Guarantee or any other document or instrument evidencing, securing or pertaining to, any indebtedness of the Company or DERMAdoctor, as the case may be, to the Purchasers that arise under or are in connection with the Debentures or the other Transaction Documents (as defined in the Purchase Agreement).
3. Termination of Subsidiary Guarantee. As of the Effective Time, the Subsidiary Guarantee is and shall automatically and irrevocably terminated and be of no further force or effect. Accordingly, as of the Effective Time, all references to DERMAdoctor and the Subsidiary Guarantee in the Purchase Agreement, the Debenture and the other Transaction Documents shall no longer be applicable and have no further force and effect.
4. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Consent and Release 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.
5. Counterparts. This Consent and Release may be executed in multiple counterparts, each of which shall be deemed an original but all of which shall constitute but one agreement, binding on all parties hereto, notwithstanding that all parties are not signatories to the same counterparts.
6. Binding Effect. This Consent and Release is binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns.
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IN WITNESS WHEREOF, the undersigned Purchasers have caused this Consent and Release to be duly executed effective as of the date first set forth above.
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Document And Entity Information |
Mar. 24, 2024 |
|---|---|
| Document Information [Line Items] | |
| Entity, Registrant Name | NovaBay Pharmaceuticals, Inc. |
| Document, Type | 8-K |
| Document, Period End Date | Mar. 24, 2024 |
| Entity, Incorporation, State or Country Code | DE |
| Entity, File Number | 001-33678 |
| Entity, Tax Identification Number | 68-0454536 |
| Entity, Address, Address Line One | 2000 Powell Street, Suite 1150 |
| Entity, Address, City or Town | Emeryville |
| Entity, Address, State or Province | CA |
| Entity, Address, Postal Zip Code | 94608 |
| City Area Code | 510 |
| Local Phone Number | 899-8800 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Title of 12(b) Security | Common Stock |
| Trading Symbol | NBY |
| Security Exchange Name | NYSE |
| Entity, Emerging Growth Company | false |
| Amendment Flag | false |
| Entity, Central Index Key | 0001389545 |