auriga8k102.htm


    
      
         

      

      
         

        
          
Exhibit
          10.2

      

      
         

      

    


    REGISTRATION
      RIGHTS AGREEMENT

    


    Registration
      Rights Agreement (the
“Agreement”), dated as of December 17, 2007, by and between Auriga
      Laboratories, Inc., a corporation organized under the laws
      of State of Delaware, with its principal executive office at 10635 Santa Monica
      Blvd., Suite 120, Los Angeles, California 90025 (the “Company”), and
      Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted company, with
      its principal office at 50 Commonwealth Avenue, Suite 2, Boston, MA 02116 (the
      “Holder”).

    


    Whereas, in
      connection with the Investment Agreement by and between the Company and the
      Investor of this date (the “Investment Agreement”), the Company has
      agreed to issue and sell to the Investor an indeterminate number of shares
      of
      the Company’s Common Stock, $.001 par value per share (the “Common
      Stock”), to be purchased pursuant to the terms and subject to the conditions
      set forth in the Investment Agreement; and

    


    Whereas, to
      induce the Investor to execute and deliver the Investment Agreement, the Company
      has agreed to provide certain registration rights under the Securities Act
      of
      1933, as amended, and the rules and regulations thereunder, or any similar
      successor statute (collectively, the “1933 Act”), and applicable state
      securities laws, with respect to the shares of Common Stock issuable pursuant
      to
      the Investment Agreement.

    


    Now
      therefore, in consideration of the
      foregoing promises and the mutual covenants contained hereinafter and other
      good
      and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the Company and the Investor hereby agree as
      follows:

    


    


    


    


    


    


    Section
      1.  DEFINITIONS.

    


    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

    


    “Execution
      Date” means the date of this Agreement set forth above.

    


    “Investor”
      means Dutchess Private Equities Fund, Ltd., a Cayman Islands exempted
      company.

    


    “Person”
      means a corporation, a limited liability company, an association, a partnership,
      an organization, a business, an individual, a governmental or political
      subdivision thereof or a governmental agency.

    


    “Potential
      Material Event” means any of the following: (i) the
      possession by the Company of material information not ripe for disclosure in
      the
      Registration Statement, which shall be evidenced by determinations in good
      faith
      by the Board of Directors of the Company that disclosure of such information
      in
      the Registration Statement would be detrimental to the business and affairs
      of
      the Company, or (ii) any material engagement or activity by the
      Company which would, in the good faith determination of the Board of Directors
      of the Company, be adversely affected by disclosure in the Registration
      Statement at such time, which determination shall be accompanied by a good
      faith
      determination by the Board of Directors of the Company that the Registration
      Statement would be materially misleading absent the inclusion of such
      information.

    


    “Principal
      Market” shall mean The American Stock Exchange, National Association of
      Securities Dealer’s, Inc., Over-the-Counter electronic bulletin board, the
      Nasdaq National Market or The Nasdaq SmallCap Market whichever is the principal
      market on which the Common Stock of the Company is listed.

    


    “Register,”
      “Registered,” and “Registration” refer to the Registration
      effected by preparing and filing one (1) or more Registration Statements in
      compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or
      any
      successor rule providing for offering securities on a continuous basis (“Rule
      415”), and the declaration or ordering of effectiveness of such Registration
      Statement(s) by the United States Securities and Exchange Commission (the
“SEC”).

    


    “Registrable
      Securities” means (i) the shares of Common Stock issued or
      issuable pursuant to the Investment Agreement, and (ii) any
      shares of capital stock issued or issuable with respect to such shares of Common
      Stock, if any, as a result of any stock split, stock dividend, recapitalization,
      exchange or similar event or otherwise, which have not been (x)
      included in the Registration Statement that has been declared effective by
      the
      SEC, or (y) sold under circumstances meeting all of the
      applicable conditions of Rule 144 (or any similar provision then in force)
      under
      the 1933 Act.

    


    “Registration
      Statement” means the registration statement of the Company filed under the
      1933 Act covering the Registrable Securities.

    


    All
      capitalized terms used in this Agreement and not otherwise defined herein shall
      have the same meaning ascribed to them as in the Investment
      Agreement.

    


    
      	
              Section
                2.  REGISTRATION.

            


    

    


    (a)  The
      Company shall, within fifteen (15) days of the date of this Agreement, file
      with
      the SEC the Registration Statement or Registration Statements (as is necessary)
      on Form SB-2 (or, if such form is unavailable for such a registration, on such
      other form as is available for such registration), covering the resale of all
      of
      the Registrable Securities, which Registration Statement(s) shall state that,
      in
      accordance with Rule 416 promulgated under the 1933 Act, such Registration
      Statement also covers such indeterminate number of additional shares of Common
      Stock as may become issuable upon stock splits, stock dividends or similar
      transactions.  The Company shall initially register for resale
      15,000,000 shares of Common Stock which would be issuable on the date preceding
      the filing of the Registration Statement based on the closing bid price of
      the
      Company’s Common Stock on such date and the amount reasonably calculated that
      represents Common Stock issuable to other parties as set forth in the Investment
      Agreement except to the extent that the SEC requires the share amount to be
      reduced as a condition of effectiveness.

    


    (b)  The
      Company shall use all commercially reasonable efforts to have the Registration
      Statement(s) declared effective by the SEC within ninety (90) calendar days
      after the Execution Date.

    


    (c)  The
      Company agrees not to include any other securities in the Registration Statement
      covering the Registrable Securities without Investor’s prior written consent
      which Investor may withhold in its sole discretion. Furthermore, the Company
      agrees that it will not file any other Registration Statement for other
      securities, until thirty calendar days after the Registration Statement for
      the
      Registrable Securities is declared effective by the SEC.

    


    
      	
              Section
                3.  RELATED
                OBLIGATIONS.

            


    

    


    At
      such time as the Company is
      obligated to prepare and file the Registration Statement with the SEC pursuant
      to Section 2(a), the Company will effect the registration of the Registrable
      Securities in accordance with the intended method of disposition thereof and,
      with respect thereto, the Company shall have the following
      obligations:

    


    


    (a)  The
      Company shall use all commercially reasonable efforts to cause such Registration
      Statement relating to the Registrable Securities to become effective within
      ninety (90) days after the Execution Date and shall keep such Registration
      Statement effective until the earlier to occur of  the date on which
(A) the Investor shall have sold all the Registrable
      Securities; or (B) the Investor has no right to acquire any
      additional shares of Common Stock under the Investment Agreement (the
“Registration Period”).  The Registration Statement (including
      any amendments or supplements thereto and prospectuses contained therein) shall
      not contain any untrue statement of a material fact or omit to state a material
      fact required to be stated therein, or necessary to make the statements therein,
      in light of the circumstances in which they were made, not misleading. The
      Company shall use all commercially reasonable efforts to respond to all SEC
      comments within seven (7) business days from receipt of such comments by the
      Company. The Company shall use all commercially reasonable efforts to cause
      the
      Registration Statement relating to the Registrable Securities to become
      effective no later than five  (5)  business days after
      notice from the SEC that the Registration Statement may be declared
      effective.  The Investor agrees to provide all information which it is
      required by law to provide to the Company, including the intended method of
      disposition of the Registrable Securities, and the Company’s obligations set
      forth above shall be conditioned on the receipt of such
      information.

    


    (b)  The
      Company shall prepare and file with the SEC such amendments (including
      post-effective amendments) and supplements to the Registration Statement and
      the
      prospectus used in connection with such Registration Statement, which prospectus
      is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may
      be
      necessary to keep such Registration Statement effective during the Registration
      Period, and, during such period, comply with the provisions of the 1933 Act
      with
      respect to the disposition of all Registrable Securities of the Company covered
      by such Registration Statement until such time as all of such Registrable
      Securities shall have been disposed of in accordance with the intended methods
      of disposition by the Investor thereof as set forth in such Registration
      Statement.  In the event the number of shares of Common Stock covered
      by the Registration Statement filed pursuant to this Agreement is at any time
      insufficient to cover all of the Registrable Securities, the Company shall
      amend
      such Registration Statement, or file a new Registration Statement (on the short
      form available therefor, if applicable), or both, so as to cover all of the
      Registrable Securities, in each case, as soon as practicable, but in any event
      within thirty (30) calendar days after the necessity therefor arises (based
      on
      the then Purchase Price of the Common Stock and other relevant factors on which
      the Company reasonably elects to rely), assuming the Company has sufficient
      authorized shares at that time, and if it does not, within thirty (30) calendar
      days after such shares are authorized.  The Company shall use
      commercially reasonable efforts to cause such amendment and/or new Registration
      Statement to become effective as soon as practicable following the filing
      thereof.

    


    (c)  The
      Company shall make available to the Investor whose Registrable Securities are
      included in any Registration Statement and its legal counsel without charge
      (i) promptly after the same is prepared and filed with the SEC
      at least one (1) copy of such Registration Statement and any amendment(s)
      thereto, including financial statements and schedules, all documents
      incorporated therein by reference and all exhibits, the prospectus included
      in
      such Registration Statement (including each preliminary prospectus) and, with
      regards to such Registration Statement(s), any correspondence by or on behalf
      of
      the Company to the SEC or the staff of the SEC and any correspondence from
      the
      SEC or the staff of the SEC to the Company or its representatives;
(ii) upon the effectiveness of any Registration Statement, the
      Company shall make available copies of the prospectus, via EDGAR, included
      in
      such Registration Statement and all amendments and supplements thereto; and
      (iii) such other documents, including copies of any preliminary
      or final prospectus, as the Investor may reasonably request from time to time
      in
      order to facilitate the disposition of the Registrable Securities.

    


    (d)  The
      Company shall use commercially reasonable efforts to (i)
      register and qualify the Registrable Securities covered by the Registration
      Statement under such other securities or “blue sky” laws of such states in the
      United States as the Investor reasonably requests; (ii) prepare
      and file in those jurisdictions, such amendments (including post-effective
      amendments) and supplements to such registrations and qualifications as may
      be
      necessary to maintain the effectiveness thereof during the Registration Period;
      (iii) take such other actions as may be necessary to maintain
      such registrations and qualifications in effect at all times during the
      Registration Period, and (iv) take all other actions reasonably
      necessary or advisable to qualify the Registrable Securities for sale in such
      jurisdictions; provided, however, that the Company shall not be
      required in connection therewith or as a condition thereto to
(x) qualify to do business in any jurisdiction where it would
      not otherwise be required to qualify but for this Section 3(d), or
(y) subject itself to general taxation in any such
      jurisdiction.  The Company shall promptly notify the Investor who
      holds Registrable Securities of the receipt by the Company of any notification
      with respect to the suspension of the registration or qualification of any
      of
      the Registrable Securities for sale under the securities or “blue sky” laws of
      any jurisdiction in the United States or its receipt of actual notice of the
      initiation or threatening of any proceeding for such purpose.

    


    (e)  As
      promptly as practicable after becoming aware of such event, the Company shall
      notify Investor in writing of the happening of any event as a result of which
      the prospectus included in the Registration Statement, as then in effect,
      includes an untrue statement of a material fact or omission to state a material
      fact required to be stated therein or necessary to make the statements therein,
      in light of the circumstances under which they were made, not misleading
      (“Registration Default”) and use all diligent efforts to promptly prepare
      a supplement or amendment to such Registration Statement and take any other
      necessary steps to cure the Registration Default (which, if such Registration
      Statement is on Form S-3, may consist of a document to be filed by the Company
      with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act
      (as
      defined below) and to be incorporated by reference in the prospectus) to correct
      such untrue statement or omission, and make available copies of such supplement
      or amendment to the Investor. The Company shall also promptly notify the
      Investor (i) when a prospectus or any prospectus supplement or
      post-effective amendment has been filed, and when the Registration Statement
      or
      any post-effective amendment has become effective (the Company will prepare
      notification of such effectiveness which shall be delivered to the Investor
      on
      the same day of such effectiveness and by overnight mail), additionally, the
      Company will promptly provide to the Investor, a copy of the effectiveness
      order
      prepared by the SEC once it is received by the Company; (ii) of
      any request by the SEC for amendments or supplements to the Registration
      Statement or related prospectus or related information, (iii)
of the Company’s reasonable determination that a post-effective
      amendment to the Registration Statement would be appropriate,
(iv) in the event the Registration Statement is no longer
      effective, or (v) if the Registration Statement is stale as a
      result of the Company’s failure to timely file its financials or otherwise. The
      Company acknowledges that its failure to cure the Registration Default within
      ten (10) business days will cause the Investor to suffer damages in an amount
      that will be difficult to ascertain.  Accordingly, the parties agree
      that it is appropriate to include a provision for liquidated
      damages.  The parties acknowledge and agree that the liquidated
      damages provision set forth in this section represents the parties’ good faith
      effort to quantify such damages and, as such, agree that the form and amount
      of
      such liquidated damages are reasonable and will not constitute a
      penalty.  It is the intention of the parties that interest payable
      under any of the terms of this Agreement shall not exceed the maximum amount
      permitted under any applicable law. If a law, which applies to this Agreement,
      which sets the maximum interest amount, is finally interpreted so that the
      interest in connection with this Agreement exceeds the permitted limits, then:
      (1) any such interest shall be reduced by the amount necessary
      to reduce the interest to the permitted limit; and (2) any sums
      already collected (if any) from the Company which exceed the permitted limits
      will be refunded to the Company.  The Investor may choose to make this
      refund by reducing the amount that the Company owes under this Agreement or
      by
      making a direct payment to the Company.  If a refund reduces the
      amount that the Company owes the Investor, the reduction will be treated as
      a
      partial payment.

    


    (f)  The
      Company shall use all commercially reasonable efforts to prevent the issuance
      of
      any stop order or other  suspension of effectiveness of the
      Registration Statement, or the suspension of the qualification of any of the
      Registrable Securities for sale in any jurisdiction and, if such an order or
      suspension is issued,  to obtain the withdrawal of such order or
      suspension at the earliest possible moment and to notify the Investor holding
      Registrable Securities being sold of the issuance of such order and
      the  resolution thereof or its receipt of actual notice of the
      initiation or threat of any proceeding concerning the effectiveness of the
      registration statement.

    


    (g)  The
      Company shall permit the Investor and one (1) legal counsel, designated by
      the
      Investor, to review and comment upon the Registration Statement and all
      amendments and supplements thereto at least one (1) calendar day prior to their
      filing with the SEC.  However, any postponement of a filing of a
      Registration Statement or any postponement of a request for acceleration or
      any
      postponement of the effective date or effectiveness of a Registration Statement
      by written request of the Investor (collectively, the "Investor's Delay") shall
      not act to trigger any penalty of any kind, or any cash amount due or any
      in-kind amount due the Investor from the Company under any and all agreements
      of
      any nature or kind between the Company and the Investor.  The event(s)
      of an Investor's Delay shall act to suspend all obligations of any kind or
      nature of the Company under any and all agreements of any nature or kind between
      the Company and the Investor.

    


    (h)  At
      the request of the Investor, the Company's counsel shall furnish to the Investor
      an opinion letter confirming the effectiveness of the registration
      statement.  Such opinion letter shall be issued as of the date of the
      effectiveness of the registration statement and be in a form suitable to the
      Investor.

    


    (i)  The
      Company shall hold in confidence and not make any disclosure of information
      concerning the Investor unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid
      or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a
      subpoena or other final, non-appealable order from a court or governmental
      body
      of competent jurisdiction, or (iv) such information has been
      made generally available to the public other than by disclosure in violation
      of
      this Agreement or any other agreement.  The Company agrees that it
      shall, upon learning that disclosure of such information concerning the Investor
      is sought in or by a court or governmental body of competent jurisdiction or
      through other means, give prompt written notice to the Investor and allow the
      Investor, at the Investor’s expense, to undertake appropriate action to prevent
      disclosure of, or to obtain a protective order covering such
      information.

    


    (j)  The
      Company shall use all commercially reasonable efforts to maintain designation
      and quotation of all the Registrable Securities covered by any Registration
      Statement on the Principal Market.  If, despite the Company’s
      commercially reasonable efforts, the Company is unsuccessful in satisfying
      the
      preceding sentence, it shall use commercially reasonable efforts to cause all
      the Registrable Securities covered by any Registration Statement to be listed
      on
      each other national securities exchange and automated quotation system, if
      any,
      on which securities of the same class or series issued by the Company are then
      listed, if any, if the listing of such Registrable Securities is then permitted
      under the rules of such exchange or system.  The Company shall pay all
      fees and expenses in connection with satisfying its obligation under this
      Section 3(j).

    


    (k)  The
      Company shall cooperate with the Investor to facilitate the prompt preparation
      and delivery of certificates representing the Registrable Securities to be
      offered pursuant to the Registration Statement and enable such certificates
      to
      be in such denominations or amounts, as the case may be, as the Investor may
      reasonably request (and after any sales of such Registrable Securities by the
      Investor, such certificates not bearing any restrictive legend).

    


    (l)  The
      Company shall provide a transfer agent for all the Registrable Securities not
      later than the effective date of the first Registration Statement filed pursuant
      hereto.

    


    (m)  If
      requested by the Investor, the Company shall (i) as soon as
      reasonably practical incorporate in a prospectus supplement or post-effective
      amendment such information as the Investor reasonably determines should be
      included therein relating to the sale and distribution of Registrable
      Securities, including, without limitation, information with respect to the
      offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement
      or
      post-effective amendment as soon as reasonably possible after being notified
      of
      the matters to be incorporated in such prospectus supplement or post-effective
      amendment; and (iii) supplement or make amendments to any
      Registration Statement if reasonably requested by the Investor.

    


    (n)  The
      Company shall use all commercially reasonable efforts to cause the Registrable
      Securities covered by the applicable Registration Statement to be registered
      with or approved by such other governmental agencies or authorities as may
      be
      necessary to facilitate the disposition of such Registrable
      Securities.

    


    (o)  The
      Company shall otherwise use all commercially reasonable efforts to comply with
      all applicable rules and regulations of the SEC in connection with any
      registration hereunder.

    


    (p)  Within
      one (1) business day after the Registration Statement which includes Registrable
      Securities is declared effective by the SEC, the Company shall deliver to the
      transfer agent for such Registrable Securities, with copies to the Investor,
      confirmation that such Registration Statement has been declared effective by
      the
      SEC.

    


    (q)  The
      Company shall take all other reasonable actions necessary to expedite and
      facilitate disposition by the Investor of Registrable Securities pursuant to
      the
      Registration Statement.

    


    


    Section
      4.  OBLIGATIONS OF THE INVESTOR.

    


    (a)  At
      least five (5) calendar days prior to the first anticipated filing date of
      the
      Registration Statement  the Company shall notify the Investor in
      writing of the information the Company requires from the Investor for the
      Registration Statement.  It shall be a condition precedent to the
      obligations of the Company to complete the registration pursuant to this
      Agreement with respect to the Registrable Securities and the Investor agrees
      to
      furnish to the Company that information regarding itself, the Registrable
      Securities and the intended method of disposition of the Registrable Securities
      as shall reasonably be required to effect the registration of such Registrable
      Securities and the Investor shall execute such documents in connection with
      such
      registration as the Company may reasonably request.  The Investor
      covenants and agrees that, in connection with any sale of Registrable Securities
      by it pursuant to the Registration Statement, it shall comply with the “Plan of
      Distribution” section of the then current prospectus relating to such
      Registration Statement.

    


    (b)  The
      Investor, by its acceptance of the Registrable Securities, agrees to cooperate
      with the Company as reasonably requested by the Company in connection with
      the
      preparation and filing of any Registration Statement hereunder, unless the
      Investor has notified the Company in writing of an election to exclude all
      of
      the Investor’s Registrable Securities from such Registration
      Statement.

    


    (c)  The
      Investor agrees that, upon receipt of written notice from the Company of the
      happening of any event of the kind described in Section 3(f) or the first
      sentence of 3(e), the Investor will immediately discontinue disposition of
      Registrable Securities pursuant to any Registration Statement(s) covering such
      Registrable Securities until the Investor’s receipt of the copies of the
      supplemented or amended prospectus contemplated by Section 3(f) or the first
      sentence of 3(e).

    


    
      	
              Section
                5.  EXPENSES OF
                REGISTRATION.

            


    

    


    All
      expenses, other than underwriting
      discounts and commissions and other than as set forth in the Investment
      Agreement, incurred in connection with registrations including comments, filings
      or qualifications pursuant to Sections 2 and 3, including, without limitation,
      all registration, listing and qualifications fees, printing and accounting
      fees,
      and fees and disbursements of counsel for the Company or for the Investor shall
      be paid by the Company.

    


    
      	
              Section
                6.  INDEMNIFICATION.

            


    

    


    In
      the event any Registrable Securities
      are included in the Registration Statement under this Agreement:

    


    


    (a)  To
      the
      fullest extent permitted by law, the Company, under this Agreement, will, and
      hereby does, indemnify, hold harmless and defend the Investor who holds
      Registrable Securities, the directors, officers, partners, employees, counsel,
      agents, representatives of, and each Person, if any, who controls, any Investor
      within the meaning of the 1933 Act or the Securities Exchange Act of 1934,
      as
      amended (the “1934 Act”) (each, an “Indemnified Person”), against
      any losses, claims, damages, liabilities, judgments, fines, penalties, charges,
      costs, attorneys’ fees, amounts paid in settlement or expenses, joint or several
      (collectively, “Claims”), incurred in investigating, preparing or
      defending any action, claim, suit, inquiry, proceeding, investigation or appeal
      taken from the foregoing by or before any court or governmental, administrative
      or other regulatory agency, body or the SEC, whether pending or threatened,
      whether or not an indemnified party is or may be a party thereto
      (“Indemnified Damages”), to which any of them may become subject insofar
      as such Claims (or actions or proceedings, whether commenced or threatened,
      in
      respect thereof) arise out of or are based upon: (i) any untrue
      statement or alleged untrue statement of a material fact in the Registration
      Statement or any post-effective amendment thereto or in any filing made in
      connection with the qualification of the offering under the securities or other
      “blue sky” laws of any jurisdiction in which the Investor has requested in
      writing that the Company register or qualify the Shares (“Blue Sky
      Filing”), or the omission or alleged omission to state a material fact
      required to be stated therein or necessary to make the statements therein,
      in
      light of the circumstances under which the statements therein were made, not
      misleading, (ii) any untrue statement or alleged untrue
      statement of a material fact contained in the final prospectus (as amended
      or
      supplemented, if the Company files any amendment thereof or supplement thereto
      with the SEC) or the omission or alleged omission to state therein any material
      fact necessary to make the statements made therein, in light of the
      circumstances under which the statements therein were made, not misleading,
      or
(iii) any violation or alleged violation by the Company of the
      1933 Act, the 1934 Act, any other law, including, without limitation, any state
      securities law, or any rule or regulation thereunder relating to the offer
      or
      sale of the Registrable Securities pursuant to the Registration Statement (the
      matters in the foregoing clauses (i) through (iii) being, collectively,
“Violations”).  Subject to the restrictions set forth in
      Section 6(c) the Company shall reimburse the Investor and each such controlling
      person, promptly as such expenses are incurred and are due and payable, for
      any
      reasonable legal fees or other reasonable expenses incurred by them in
      connection with investigating or defending any such Claim. Notwithstanding
      anything to the contrary contained herein, the indemnification agreement
      contained in this Section 6(a): (i) shall not apply to a Claim
      arising out of or based upon a Violation which is due to the inclusion in the
      Registration Statement of the information furnished to the Company by any
      Indemnified Person expressly for use in connection with the preparation of
      the
      Registration Statement or any such amendment thereof or supplement thereto;
      (ii) shall not be available to the extent such Claim is based
      on (a) a failure of the Investor to deliver or to cause to be
      delivered the prospectus made available by the Company or (b)
      the Indemnified Person’s use of an incorrect prospectus despite being promptly
      advised in advance by the Company in writing not to use such incorrect
      prospectus;  (iii) any claims based on the manner of
      sale of the Registrable Securities by the Investor or of the Investor’s failure
      to register as a dealer under applicable securities laws; (iv)
      any omission of the Investor to notify the Company of any material fact that
      should be stated in the Registration Statement or prospectus relating to the
      Investor or the manner of sale; and (v) any amounts paid in
      settlement of any Claim if such settlement is effected without the prior written
      consent of the Company, which consent shall not be unreasonably
      withheld.  Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of the Indemnified Person
      and  shall survive the resale of the Registrable Securities by the
      Investor pursuant to the Registration Statement.

    


    (b)  In
      connection with any Registration Statement in which Investor is participating,
      the Investor agrees to severally and jointly indemnify, hold harmless and
      defend, to the  same extent and in the same manner as is set forth in
      Section 6(a), the Company, each of its  directors, each of its
      officers who signs the Registration Statement, each Person, if any, who controls
      the Company within the meaning of the 1933 Act or the 1934 Act and the Company’s
      agents (collectively and together with an Indemnified Person, an “Indemnified
      Party”), against any Claim or Indemnified Damages to which any of them may
      become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such
      Claim or Indemnified Damages arise out of or are based upon any Violation,
      in
      each case to the extent, and only to the extent, that such Violation is due
      to
      the inclusion in the Registration Statement of the written information furnished
      to the Company by the Investor expressly for use in connection with such
      Registration Statement; and, subject to Section 6(c), the Investor will
      reimburse any legal or other expenses reasonably incurred by them in connection
      with investigating or defending any such Claim; provided, however, that
      the indemnity agreement contained in this Section 6(b) and the agreement with
      respect to contribution contained in Section 7 shall not apply to amounts paid
      in settlement of any Claim if such settlement is effected without the prior
      written consent of the Investor, which consent shall not be unreasonably
      withheld; provided, further, however, that the Investor shall only be liable
      under this Section 6(b) for  that amount of a Claim or Indemnified
      Damages as does not exceed the net proceeds to such Investor as a result of
      the
      sale of Registrable Securities pursuant to such Registration
      Statement.  Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of such Indemnified Party
      and shall survive the resale of the Registrable Securities by the Investor
      pursuant to the Registration Statement. Notwithstanding anything to the contrary
      contained herein, the indemnification agreement contained in this Section 6(b)
      with respect to any preliminary prospectus shall not inure to the benefit of
      any
      Indemnified Party if the untrue statement or omission of material fact contained
      in the preliminary prospectus were corrected on a timely basis in the
      prospectus, as then amended or supplemented.  This indemnification
      provision shall apply separately to each Investor and liability hereunder shall
      not be joint and several.

    


    (c)  Promptly
      after
      receipt by an Indemnified Person or Indemnified Party under this Section 6
      of
      notice of the commencement of any action or proceeding (including any
      governmental action or proceeding) involving a Claim, such Indemnified Person
      or
      Indemnified Party shall, if a Claim in respect thereof is to be made against
      any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and, to the extent the indemnifying party
      so
      desires, jointly with any other indemnifying party similarly noticed, to assume
      control of the defense thereof with counsel mutually satisfactory to the
      indemnifying party and the Indemnified Person or the Indemnified Party, as
      the
      case may be; provided, however, that an Indemnified Person or Indemnified Party
      shall have the right to retain its own counsel with the fees and expenses to
      be
      paid by the indemnifying party, if, in the reasonable opinion of counsel
      retained by the Indemnified Person or Indemnified Party, the representation
      by
      counsel of the Indemnified Person or Indemnified Party and the indemnifying
      party would be inappropriate due to actual or potential differing interests
      between such Indemnified Person or Indemnified Party and any other party
      represented by such counsel in such proceeding.  The indemnifying
      party shall pay for only one (1) separate legal counsel for the Indemnified
      Persons or the Indemnified Parties, as applicable, and such counsel shall be
      selected by the Investor, if the Investor is entitled to indemnification
      hereunder, or the Company, if the Company is entitled to indemnification
      hereunder, as applicable.  The Indemnified Party or Indemnified Person
      shall cooperate fully with the indemnifying party in connection with any
      negotiation or defense of any such action or Claim by the indemnifying party
      and
      shall furnish to the indemnifying party all information reasonably available
      to
      the Indemnified Party or Indemnified Person which relates to such action or
      Claim.  The indemnifying party shall keep the Indemnified Party or
      Indemnified Person fully apprised at all times as to the status of the defense
      or any settlement negotiations with respect thereto.  No indemnifying
      party shall be liable for any settlement of any action, claim or proceeding
      affected without its written consent, provided, however, that the indemnifying
      party shall not unreasonably withhold, delay or condition its consent. No
      indemnifying party shall, without the consent of the Indemnified Party or
      Indemnified Person, consent to entry of any judgment or enter into any
      settlement or other compromise which does not include as an unconditional term
      thereof the giving by the claimant or plaintiff to such Indemnified Party or
      Indemnified Person of a release from all liability in respect to such
      Claim.  Following indemnification as provided for hereunder, the
      indemnifying party shall be subrogated to all rights of the Indemnified Party
      or
      Indemnified Person with respect to all third parties, firms or corporations
      relating to the matter for which indemnification has been made.  The
      failure to deliver written notice to the indemnifying party within a reasonable
      time of the commencement of any such action shall not relieve such indemnifying
      party of any liability to the Indemnified Person or Indemnified Party under
      this
      Section 6, except to the extent that the indemnifying party is prejudiced in
      its
      ability to defend such action.

    


    (d)  The
      indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified
      Party or Indemnified Person against the indemnifying party or others, and
(ii) any liabilities the indemnifying party may be subject to
      pursuant to the law.

    


    Section
      7.  CONTRIBUTION.

    


    To
      the extent any indemnification by an
      indemnifying party is prohibited or limited by law, the indemnifying party
      agrees to make the maximum contribution with respect to any amounts for which
      it
      would otherwise be liable under Section 6 to the fullest extent permitted by
      law; provided, however, that: (i) no contribution
      shall be made under circumstances where the maker would not have been liable
      for
      indemnification under the fault standards set forth in Section 6;
(ii) no seller of Registrable Securities guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall
      be
      entitled to contribution from any seller of Registrable Securities who was
      not
      guilty of fraudulent misrepresentation; and (iii) contribution
      by any seller of Registrable Securities shall be limited in amount to the net
      amount of proceeds received by such seller from the sale of such Registrable
      Securities.

    


    
      	
              Section
                8.

            	
              REPORTS
                UNDER THE 1934 ACT.

            


    

    


    With
      a view to making available to the
      Investor the benefits of Rule 144 promulgated under the 1933 Act or any other
      similar rule or regulation of the SEC that may at any time permit the Investor
      to sell securities of the Company to the public without registration (“Rule
      144”), provided that the Investor holds any Registrable Securities are
      eligible for resale under Rule 144 (k), the Company agrees to:

    


    (a)           make
      and keep public information available, as those terms are understood and defined
      in Rule 144;

    


    (b)           file
      with the SEC in a timely manner all reports and other documents required of
      the
      Company under the 1933 Act and the 1934 Act so long as the Company remains
      subject to such requirements (it being understood that nothing herein shall
      limit the Company’s obligations under Section 5(c) of the Investment Agreement)
      and the filing of such reports and other documents is required for the
      applicable provisions of Rule 144; and

    


    (c)           furnish
      to the Investor, promptly upon request, (i) a written statement
      by the Company that it has complied with the reporting requirements of Rule
      144,
      the 1933 Act and the 1934 Act, (ii) a copy of the most recent
      annual or quarterly report of the Company and such other reports and documents
      so filed by the Company, and (iii) such other information as
      may be reasonably requested to permit the Investor to sell such securities
      pursuant to Rule 144 without registration.

    


    Section
      9.  NO ASSIGNMENT OF REGISTRATION RIGHTS.

    


    The
      rights and obligations under this
      Agreement shall not be assignable.

     

    


    Section
      10.  AMENDMENT OF REGISTRATION RIGHTS.

    


    The
      provisions of this Agreement may be
      amended only with the written consent of the Company and Investor.

    


    Section
      11.  MISCELLANEOUS.

    


    (a)  Any
      notices or other communications required or permitted to be given under the
      terms of this Agreement that must be in writing will be deemed to have been
      delivered (i) upon receipt, when delivered personally;
(ii) upon receipt, when sent by facsimile (provided
      a
      confirmation of transmission is mechanically or electronically generated and
      kept on file by the sending party); or (iii) one (1) day after
      deposit with a nationally recognized overnight delivery service, in each case
      properly addressed to the party to receive the same.  The addresses
      and facsimile numbers for such communications shall be:

    


    If
      to the
      Company:

    


                          Auriga
      Laboratories, Inc.

    10635
      Santa Monica Blvd.

    Suite
      120

    Los
      Angeles, CA

    Telephone:
      (310) 461-3600

    Facsimile:
      (310) 806-4161

    


    


    If
      to the
      Investor:

    


    Dutchess
      Private Equities Fund,
      Ltd.

    50
      Commonwealth Ave, Suite
      2

    Boston,
      MA 02116

    Telephone:
      (617) 301-4700

    Facsimile:  (617)
      249-0947

    


    Each
      party shall provide five (5)
      business days prior notice to the other party of any change in address, phone
      number or facsimile number.

    


    (b)  Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

    


    (c)   This
      Agreement and the Transaction Documents constitute the entire agreement among
      the parties hereto with respect to the subject matter hereof and
      thereof.  There are no restrictions, promises, warranties or
      undertakings, other than those set forth or referred to herein and
      therein.

    


    (d)  This
      Agreement and the Transaction Documents supersede all prior agreements and
      understandings among the parties hereto with respect to the subject matter
      hereof and thereof.

    


    (e)
      The headings in this Agreement are for convenience of reference only
      and shall not limit or otherwise affect the meaning hereof.  Whenever
      required by the context of this Agreement, the singular shall include the plural
      and masculine shall include the feminine.  This Agreement shall not be
      construed as if it had been prepared by one of the parties, but rather as if
      all
      the parties had prepared the same.

    


    (f)  This
      Agreement may be executed in two or more identical counterparts, each of which
      shall be deemed an original but all of which shall constitute one and the same
      agreement.  This Agreement, once executed by a party, may be delivered
      to the other party hereto by facsimile transmission of a copy of this Agreement
      bearing the signature of the party so delivering this Agreement.

    


    (g)  Each
      party shall do and perform, or cause to be done and performed, all such further
      acts and things, and shall execute and deliver all such other agreements,
      certificates, instruments and documents, as the other party may reasonably
      request in order to carry out the intent and accomplish the purposes of this
      Agreement and the consummation of the transactions contemplated
      hereby.

    


    (h)
      In case any provision of this Agreement is held by a court of competent
      jurisdiction to be excessive in scope or otherwise invalid or unenforceable,
      such provision shall be adjusted rather than voided, if possible, so that it
      is
      enforceable to the maximum extent possible, and the validity and enforceability
      of the remaining provisions of this Agreement will not in any way be affected
      or
      impaired thereby.

    


    


    Section
      12.  DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS
      LAW

    


    All
      disputes arising under this
      agreement shall be governed by and interpreted in accordance with the laws of
      the Commonwealth of Massachusetts, without regard to principles of conflict
      of
      laws.  The parties to this agreement will submit all disputes arising
      under this agreement to arbitration in Boston, Massachusetts before a single
      arbitrator of the American Arbitration Association (“AAA”).  The
      arbitrator shall be selected by application of the rules of the AAA, or by
      mutual agreement of the parties, except that such arbitrator shall be an
      attorney admitted to practice law in the Commonwealth of
      Massachusetts.  No party to this agreement will challenge the
      jurisdiction or venue provisions as provided in this section.  Nothing
      contained herein shall prevent the party from obtaining an
      injunction.

    


    


    *.*.*

    SIGNATURE
      PAGE OF REGISTRATION RIGHTS AGREEMENT

    


     

    Your
      signature on this Signature Page evidences your agreement to be bound by the
      terms and conditions of the Investment Agreement and the Registration Rights
      Agreement as of the date first written above.

     

     

    The
      undersigned signatory hereby certifies that he has read and understands the
      Registration Rights Agreement, and the representations made by the undersigned
      in this Registration Rights Agreement are true and accurate, and agrees to
      be
      bound by its terms.

     

    


    DUTCHESS
      PRIVATE EQUITIES FUND,
      LTD.,

    


    


    


    By:
      _________________________________

    Douglas
      H. Leighton, Director

    


    


    


    AURIGA
      LABORATORIES, INC.

    


    


    By:
      __________________________________

          Philip
      S. Pesin, CEO