exhibit104.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    AMENDMENT
NO. 1 TO

     

    SECURITY
AGREEMENT

     

    THIS
AMENDMENT NO. 1 TO SECURITY AGREEMENT (“Amendment”) is made
as of June 9, 2008, by and among Auriga Laboratories, Inc., a Delaware
corporation (the “Company”), and the
parties listed on the signature page hereto as “Secured Parties”.

     

    R E C I T A L
S

    


    WHEREAS,
the Company and Prospector Capital Partners, LLC entered into that certain
Security Agreement, dated February 13, 2008 (the “Security
Agreement”);

     

    WHEREAS,
the Company and Prospector Capital Partners, LLC desire to amend the Security
Agreement to specify that the “Notes” (as defined in the Security Agreement)
shall be defined as the Amended and Restated Senior Secured Promissory Note
originally issued under the Senior Secured Note and Warrant Purchase Agreement,
dated February 13, 2008, and amended as of the date hereof (the “Amended Prior
Note”) as well as the Notes issued to Prospector Capital Partners II, LLC
pursuant to the Senior Secured Convertible Promissory Note Purchase Agreement,
dated as of the date hereof, by and between the Company and Prospector Capital
Partners II, LLC, and to make certain other changes to the Security Agreement as
set forth below; and

     

    WHEREAS,
pursuant to Section 7.6 of the Security Agreement, any term of the Security
Agreement may be amended with the written consent of the Company and Prospector
Capital Partners, LLC.

     

    NOW,
THEREFORE, in consideration of the promises and conditions contained herein, the
parties hereby agree as follows:

     

    1. The first
recital of the Security Agreement be, and it hereby is, amended and restated to
read as follows:

     

    “WHEREAS,
the Company issued and may issue additional Notes to the Secured
Parties;

     

    2. The
following definitions are hereby added to Section 1.1 of the Security
Agreement:

     

    ““Notes” shall mean the
Amended and Restated Senior Secured Promissory Note and the Senior Secured
Secured Convertible Promissory Notes issued pursuant to the Purchase
Agreements.”

     

    ““Purchase Agreements”
shall mean the Senior Secured Note and Warrant Purchase Agreement, dated
February 13, 2008, and amended as of the date hereof, by and between the Company
and Prospector Capital Partners, LLC and the Senior Secured Convertible
Promissory Note Purchase Agreement, dated as of the date hereof, by and between
the Company and Prospector Capital Partners II, LLC.”

     

    3. Each
reference to “Offering” in the Security Agreement shall be changed to the
“Purchase Agreements”:

     

    4. Each
reference to the “Secured Party” in the Security Agreement shall be changed to
the “Secured Parties”.

     

    5. MISCELLANEOUS.

     

    5.1 Capitalized
Terms.  Capitalized terms not otherwise defined herein shall
have the meaning given them in the Security Agreement.

     

    5.2 Full Force and
Effect.  Except as otherwise provided above, the terms and
conditions of the Security Agreement shall remain in full force and
effect.

     

    5.3 Successors and
Assigns.  Except as otherwise provided herein, the terms and
conditions of this Amendment shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties.

     

    5.4 Governing
Law.  This Amendment shall be governed by and construed under
the laws of the State of Delaware.

     

    5.5 Counterparts.  This
Amendment may be executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.

     

    5.6 Amendments and
Waivers.  Any term of this Amendment may be amended and the
observance of any term of this Amendment may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Secured Parties.

     

    


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    IN
WITNESS WHEREOF, the parties have executed this Amendment No. 1 to Security
Agreement as of the date first above written.

     

    AURIGA
LABORATORIES, INC.

    


    


    By:
__________________________________

    Name:
________________________________

    Title:
_________________________________

    


    Address:                      5284
Adolfo Road

    Camarillo, CA 93012

    Fax:                 (805) 299-4932

    


     

    SECURED
PARTIES

     

    PROSPECTOR
CAPITAL PARTNERS, LLC

    


    


    


    ________________________________________

    By:
Hudson & Co., LLC

    Its:
Manager

    Title:
Authorized Person

    


    


    PROSPECTOR
CAPITAL PARTNERS II, LLC

    


    


    


    ________________________________________

    By:
Hudson & Co., LLC

    Its:
Manager

    Title:
Authorized Person

    


    


    Address:

    3112
Windsor Road, Suite A-137

    Austin,
TX 78703

    Fax:
866-477-2971