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Exhibit  10.4

**AMENDED AND RESTATED AQUAMER, INC.****PRODUCT SUPPLY      AGREEMENT**

This  PRODUCT SUPPLY AGREEMENT ("Agreement") effective as of March 31, 2006 (the "Effective Date") by and between Aquamer,  Inc., Inc., a Delaware corporation, with offices at 237 Cedar Hill Street, Ste  4, Marlborough, MA 01752,  and Partners in Biomaterials, Inc., a California  corporation, with offices at 466 West Arrow Highway, Suite H, San Dimas,  California, 91773. Aquamer, Inc. and Partners in Biomaterials either  individually or in the collective may be hereinafter referred to as a "Party"  or the "Parties."  

BACKGROUND

WHEREAS,  Aquamer, Inc. has a need for and desires to purchase certain polymer Products  (as defined herein) and Aquamer, Inc. desires to purchase its requirements of  such Products from Partners in Biomaterials;

WHEREAS, the Parties have entered  into a Product Supply Agreement as of  October 14, 1999 as amended on March 6,  2002, May 4, 2002, and October 19, 2005, all of which the Parties desire to  replace and supercede in its entirety with this Agreement; and

WHEREAS,  Partners in Biomaterials has acquired the right to manufacture, or have  manufactured for it, and sell such polymer Products and desires to supply  Aquamer, Inc. with its requirement for Products.

NOW,  THEREFORE, in consideration of the foregoing and mutual promises and covenants  contained herein, the Parties agree as follows:

**1.   DEFINITIONS**

The following  terms shall have the following meanings herein:

1.1   "CE Mark" shall mean "Certified for Export," indicating that the product  may be exported to and marketed in the European Common Market (EEC).

1.2  "FDA"  shall mean the US. Food and Drug Administration.

1.3  *"*GMP*"*shall mean Good Manufacturing Practices as established by FDA regulations.

1.4   "Intellectual Property Rights" shall mean all current and future  worldwide patents and other patent rights, copyrights, trade secrets, and all  other intellectual property rights, including without limitation all  applications and registrations with respect thereto.

1.5     "PMA"  shall mean FDA "PreMarket Approval" to market and sell products in the U.S.

1.6 **"**Products**"**shall mean the high water content hydrogel product based on poly-N-vinylpyrrolidone as claimed in U.S. Patents 5,116,371 and  5,713,960 attached hereto, and/or made a part hereof, of Exhibit C, and as set  forth in Exhibit A attached hereto and described and made in accordance with  the respective detailed Specification.

1.7    "Specifications"  shall mean the technical and other specifications for the Products set forth in  Exhibit A.

1.8    "Specified  Use" shall mean the use of the Products in the fields of dermatology (for  application of the Products in the epidermis, dermis, or subcutaneous fatty  tissue),  urology, and  gastroenterology.

**2.   OWNERSHIP**

Each  party shall retain ownership of all Intellectual Property Rights owned by it as  of the Effective Date. Nothing in this Agreement shall be construed to convey any  title or ownership interest in and to any Intellectual Property Rights owned by  either party hereto.

**3.   PRODUCT MANUFACTURE AND SALE**

3.1   Purchase  and Sale.  Subject to the terms and conditions of this Agreement, Partners  in Biomaterials agrees to manufacture and sell to Aquamer, Inc. all Products  ordered by Aquamer, Inc. during the term of this Agreement for the Specified  Use.

3.2   Exclusive  Supplier.  During the term of this Agreement, Partners in Biomaterials  shall be the exclusive supplier of Products to Aquamer, Inc. for its worldwide  sales. Notwithstanding the foregoing, if Partners in Biomaterials is unable to  supply Aquamer, Inc.’s requirements for Products, Aquamer, Inc. shall, until  such time as Partners in Biomaterials can reasonably demonstrate manufacturing  capacity, financing (if needed), sources of raw materials and ability to meet  Aquamer, Inc.’s reasonable delivery schedule, sufficient to meet Aquamer,  Inc.’s requirements for Products, have the right to secure access to the  Products or any components from any other non-affiliated source. In that event,  Aquamer, Inc. shall contract with the other source to manufacture the Products  sufficient to meet Aquamer, Inc.’s requirements for Products during the interim  period.  At such time when Partners In Biomaterials demonstrates sufficient  manufacturing capacity, financing (if needed), sources of raw materials and  ability to meet Aquamer, Inc.’s reasonable delivery schedule, Aquamer, Inc.  shall cease to purchase further products from the other source.

3.3    Regulatory  Approvals.   Aquamer, Inc. shall be solely respon­sible for regulatory  clearances deemed necessary by individual  countries or regulatory bodies.  Partners in Biomaterials shall use its best efforts to provide technical  information and physical test data as requested by Aquamer, Inc. in support of  such efforts to the extent that such information and/or physical test data is  readily available and/or can be made available without unreasonable effort or  expense. In the event that any such information and/or physical test data is  not readily available by Partners in Biomaterials for Aquamer, Inc., then any  expense incurred by Partners in Biomaterials arising from Aquamer, Inc.’s  request shall be paid for by Aquamer, Inc.

3.4   Approved  Manufacturing Facility.   Partners in Biomaterials shall ensure that its  manufacturing facilities conform to European Community (EC) and ISO standards  requirements at such time as is required for the sale of product for the  Specified Use bearing a CE Mark and/or a PMA approval. 

3.5   Packaging  Development.   Development and testing of packaging and procurement of  containers for the Product shall be the responsibility of Aquamer, Inc.   Validation of the processes used to manufacture the Product in the packaging at  Partners In Biomaterials shall be the responsibility of Partners In  Biomaterials.

3.6   Orders.   Aquamer, Inc. may initiate purchases under this Agreement by submitting written  purchase orders to Partners in Biomaterials at the address above, together with prepayment for one half of the  Products ordered. All purchase orders shall contain: (a) purchase order number  and date; (b) Product model number; (c) specification number and revision  level; (d) part number and revision level; (e) quantity of Product(s) to be  purchased; (f) shipping instruc­tions; (g) specified delivery date; (h)  destination and billing address (if different from address listed above); (i)  the net unit price for the Product(s); and j) an authorized signature.

3.7   Acceptance.  Purchase orders shall be binding when accepted by Partners  in Biomaterials. Partners in Biomaterials shall acknowledge each purchase order  in writing within ten (10) business days of receipt. Within such ten (10) day  period, Partners in Biomaterials may only reject an order which does not  conform with the terms and conditions of this Agreement. Notice of rejection  must be sent to Aquamer, Inc. by telex or fax, followed by registered letter.  If an order is neither confirmed nor rejected by Partners in Biomaterials  within ten (10) business days of receipt, it shall be deemed to have been  accepted.

3.8   Delivery  Date.  Unless otherwise agreed in writing by the Parties, Partners in  Biomaterials shall deliver Products no later than five (5) days after the date  specified in an accepted purchase order, provided Partners in Biomaterials  receives such purchase order at least ninety  (90) days prior to the specified  delivery date. If Partners in Biomaterials receives a purchase order less than  ninety (90) days before the specified delivery date, Partners in Biomaterials  shall use reasonable commercial efforts to deliver such Products on the  specified delivery date.

3.9   Shipping.  All Products subject to this  Agreement shall be packaged in accordance with the Specifications set forth in  the attached Exhibit A. Partners in Biomaterials shall mark all shipping con­tainers  with necessary lifting, handling and shipping information, purchase order  numbers, and date of shipment. An itemized packing list must accompany each  shipment. Aquamer, Inc. will reimburse Partners in Biomaterials for all  transportation, shipping and insurance expenses. In the event that Aquamer,  Inc. requests special packaging or finishing for any order, as requested in  writing in conjunction with the submission of a purchase order, Aquamer, Inc.  shall pay the incremental cost for such special packaging or finishing;  provided, however, Partners in Biomaterials agrees to pack any special  documentation regarding the Products as may be requested by Aquamer, Inc., so  long as such special documentation is readily available and/or can be made  available without unreasonable effort or expense, at no additional charge. In  the event that any such special documentation is not readily available by  Partners in Biomaterials then any expenses incurred by Partners In Biomaterials  arising from Aquamer, Inc.’s request shall be prepaid  for by Aquamer, Inc..  Shipment will be F.O.B., Partners in Biomaterials’s  plant. All shipping papers and/or invoices shall include the purchase order  number and serial numbers of Products shipped.

3.10   Minimum Purchase.  Aquamer shall make minimum purchases of the Products  of fifty thousand dollars ($50,000) in each calendar year.

3.11   Terms and Conditions.  This Agreement contains the terms and conditions  which shall apply to all purchases of Products by Aquamer, Inc.. In ordering  and delivering Products, Aquamer, Inc. and Partners in Biomaterials may use  their standard forms but nothing in such forms shall amend or modify the terms  of this Agreement. In case of conflict between such forms and this Agreement,  the terms of this Agreement shall control.

**4.    RESCHEDULING **

4.1   Changes.   Aquamer, Inc. may delay delivery for up to sixty (60) days from the scheduled  delivery date of a purchase order previously accepted by Partners in  Biomaterials, provided Aquamer, Inc. provides Partners in Biomaterials notice  at least thirty (30) days prior to the specified delivery date. Partners in  Biomaterials will use reasonable commercial efforts to meet all rescheduled  delivery dates.  Aquamer, Inc. may advance delivery of a shipment only by written agreement with Partners In Biomaterials  based on the earlier availability of the Product.

4.2   Delayed  Delivery.  Partners in Biomaterials shall promptly notify Aquamer, Inc. if  any circumstance outside its reasonable control arises which could result in  delivery of a Product after the specified delivery date of an accepted purchase  order. If Aquamer, Inc. has not received Products for which Partners in  Biomaterials accepted a purchase order within thirty (30) days following the  specified delivery date, Aquamer, Inc. shall be entitled to cancel such order,  in whole or part, without any obligation or liability to Partners in  Biomaterials.

**5.   PRICING**

5.1   Product Prices.  The price for Products  (unit = sterile 1cc syringe of hydrogel with labeling according to Aquamer,  Inc. specifications) subject to this Agreement shall be those listed on  attached **Exhibit B**. All prices are in United States dollars. 

5.2    Price Adjustment.  The prices as set forth  in Exhibit B shall be reviewed annually on a calendar year basis  commencing January 1,  2007  and shall be adjusted to reflect the percentage  increase or decrease during the preceding calendar year in the Consumer Price  Index ("All Urban Consumers").  Notwithstanding anything contained herein to  the contrary, any such adjustment for any given period shall not increase or  decrease any price by more than two-and-one-half percent (2.5%). If during the  term of this Agreement revised  prices are put into effect by Partners in  Biomaterials, such revised  prices shall apply only to purchase orders received  after such revised prices are put into effect by Partners in Biomaterials and  in any event, shall be applied only to quantities ordered and shipped, on a pro-rata basis, in accordance with the attached Exhibit B.

5.3   Taxes.   All prices described herein are exclusive of federal, state and local excise,  sales, use and similar taxes. Aquamer, Inc. shall be liable for and shall pay  all applicable taxes invoiced by Partners in Biomaterials unless Aquamer, Inc.  provides Partners in Biomaterials with a properly executed tax exemption  certificate prior to delivery.

**6.   PAYMENT**

6.1   Payment.  Partners in Biomaterials shall issue Aquamer, Inc. individual invoices for each  Product shipment. Each such invoice shall separately list the price of each  Product, taxes, transportation, shipping and insurance charges, and any special  packaging or finishing charges. Prior to acceptance of an order by Partners in  Biomaterials under paragraph 3.7, Aquamer, Inc. shall pay 50% of the total  price of the order in advance and the balance  within forty five (45) days of  the date of such invoice or the delivery date, whichever is later.

6.2   Payment  Method. Aquamer, Inc. shall make payment to Partners in Biomaterials for  Products by check or by wire transfer to an account specified by Partners in  Biomaterials.

6.3   Overdue  Payments. Payments more than thirty (30) days overdue will be  subject to a service charge of one percent (1%) per month or the maximum amount  allowed by law, whichever is less.

6.4   In  the event that final payment for any shipment made to Aquamer, Inc. is more  than 30 days overdue, Partners in Biomaterials shall have no obligation to fill  subsequent orders placed by Aquamer, Inc., and Partners in Biomaterials shall  have the right to apply prepayment moneys made for such subsequent orders to  such overdue payments.

**7.   FORECASTS**

Within thirty  (30) days following acceptance of the Product pursuant to Section 2.1, and on a  quarterly basis thereafter, Aquamer, Inc. shall provide Partners in  Biomaterials with a forecast of Aquamer, Inc.’s anticipated  quarterly requirements of Products for the following twelve (12) month period  commencing on the date of such forecast. It is understood that such forecast is  not binding but Aquamer, Inc. shall use all reasonable efforts to make each  forecast as accurate as possible, particularly as it pertains to the six (6)  months immediately following the date of such forecast.

**8.   PRODUCT  QUALITY**

8.1  Quality  Assurance Program. Partners in Biomaterials agrees to assure the quality  level of Products through the use of a formal quality assurance program  reasonably acceptable to Aquamer, Inc. Such program shall require Partners in Biomaterials  to prepare and maintain written records sufficient to enable Aquamer, Inc. to  trace the history of each Product. Pursuant to such program, Partners in  Biomaterials shall place lot numbers on all Products to enable the  identification and tracing of Products. During the term of the Agreement,  Aquamer, Inc. shall have the right to audit such quality assurance program  together with the manufacturing and storage of Products, at its expense, during  regular business hours upon forty-eight (48) hours advance notice to Partners  in Biomaterials.

8.2  Inspection.  Partners in Biomaterials shall conduct a final inspection and quality control  test on each Product prior to shipment to verify that such Products meet and  conform with the Specifications. Each shipment of Products shall be accompanied  by a quality assurance analytical data sheet (the "Quality Assurance Data  Sheet").

8.3  Acceptance  by Aquamer, Inc. In accordance with Section 8.1, no inspection or test made  prior to final inspection and acceptance at Aquamer, Inc.’s facility shall  relieve Partners in Biomaterials of responsibility for defects or other failure  to supply Products that conform to the Specification or respective purchase  order. Final inspection and acceptance shall be at Aquamer, Inc.’s facility,  and shall be performed within a reasonable time, and in any event within the  specified payment period as detailed in Section 6.1.

8.4  Latent  Defects. It is understood that Products may have defects which would not be  discoverable upon reasonable physical inspection or testing (the "Latent  Defects"). As soon as either Aquamer, Inc. or Partners in Biomaterials becomes  aware of a Latent Defect in any Product it shall immediately notify the other  Party and, at either Party’s election, such Products shall be deemed non-conforming to the Specifications and rejected as of the date of such notice unless such defects  resulted from additional processing after shipment from Partners in  Biomaterials, from improper storage, handling or use by Aquamer, Inc. or from  normal wear and tear or improper, unqualified or unauthorized repair of the  products.

**9.   REGULATORY  AFFAIRS AND FDA APPROVAL**

9.1   General.   Each party agrees to conduct its activities pursuant to this Agreement in  accordance with United States and/or international regulatory laws, as may be  applicable, as applied to clinical trial protocols, device commercialization  and the protection of patient health, welfare, and safety, and any other  governmental restrictions.

9.2   Notification.   Each party agrees to notify the other party in a timely manner of any adverse  event, technical or clinical, which may involve a Product. Aquamer, Inc. agrees  to monitor the use of the Products in accordance with United States and/or international regulatory laws, and in a manner to ensure adequate and  timely data collection in order to identify, quantify and correct any  anticipated or unanticipated adverse events. In the event that either Party  determines a recall is necessary, both Parties will cooperate fully with each  other and any governmental entity required in effecting the recall.

9.3  Regulatory Inquiries.  Each Party agrees to notify the other in the  event of any United States or international regulatory inspection, notification  or communication which may involve the Products. Each Party shall cooperate  fully with the other Party in responding to United States or any international  regulatory queries regarding the Products for or about the Specified Use.

9.4   During the term of the Agreement, Aquamer, Inc. shall provide to Partners in  Biomaterials within 30 days after written request all test data provided to any  and all regulatory agencies worldwide, including the FDA, and all  correspondence to and from such regulatory agencies regarding the Product in  all licensed fields.  Partners in Biomaterials are free to disclose and/or use  such data for any purpose during the term of this agreement provided such  information is not used in the fields of dermatology, urology, and  gastroenology during the term of this Agreement.  

**10.   PRODUCT WARRANTY**

10.1  Express Warranty.  Partners in Biomaterials hereby warrants to Aquamer,  Inc. that:

(a)  on the  date of shipment, all Products sold by Partners in Biomaterials to Aquamer,  Inc. hereunder will comply with the Specifications for such Products as set  forth in Exhibit A and any further specifications, standards and/or criteria  agreed upon by both Parties in writing, conform fully with the Quality  Assurance Data Sheet provided for the particular lot of Products according to  Section 8.2 hereof, and do not contain previously identified Latent Defects;

(b)  Products  purchased hereunder shall meet the requirements of paragraph 10.1(a) throughout  the "shelf life" then specified on the Products labels;

(c)   all of the  Products sold hereunder as approved Products, as evidenced by a CE Mark or PMA  approval, shall have been manufactured, packaged and stored in conformance with  all applicable current GMP which are in force by the FDA or any successor  agency thereto at the time of manufacture; and

(d)  title to  all Products sold hereunder shall pass to Aquamer, Inc. as provided herein free  and clear of any security interest, lien, or other encumbrance upon payment in  full.

(e)   Partners  in Biomaterials makes no warranties whatsoever that the Licensed Products can  be safely and effectively used in any particular application.  

10.2   Effect  of Warranty.

(a)   If any Products purchased hereunder do not meet the  warranties specified herein, Aquamer,  Inc. may, at its option (i) require Partners in Biomaterials to replace or  correct at no cost to Aquamer, Inc. any defective or nonconforming Products,  (ii) return any nonconforming Products to Partners in Biomaterials at Partners  in Biomaterials’s expense and recover from Partners in Biomaterials a refund  for the defective product.

(b)   Waiver by Aquamer, Inc. of any specification requirement in writing for one or  more items shall not constitute a waiver of such requirements for remaining  items unless expressly agreed by Aquamer, Inc. in writing.

10.3   Exclusions.   The express warranties set forth in Section 10.1 above shall not apply to  defects to a Product which result from additional processing after shipment  from Partners In Biomaterials; from improper storage, handling, or use by and  from normal wear and tear or improper, unqualified or unauthorized repair of  Products.

10.4   Disclaimer.   EXCEPT FOR THE ABOVE EXPRESS WARRANTIES, PARTNERS IN BIOMATERIALS MAKES NO  WARRANTIES WITH RESPECT TO THE PRODUCTS, EXPRESS, IMPLIED, STATUTORY, OR IN ANY  OTHER PROVISION OF THIS AGREEMENT, AND PARTNERS IN BIOMATERIALS SPECIFICALLY  DISCLAIMS ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR  PURPOSE.

10.5   Returns.    Subject to Section 10.2 above, Aquamer, Inc. may send Products with defects  covered by the foregoing warranties to Partners in Biomaterials at an address  specified by Partners in Biomaterials from time to time. Aquamer, Inc. shall  request authorization from Partners in Biomaterials prior to the return of each  defective Product for replacement by Partners in Biomaterials. Upon such  request, Partners in Biomaterials shall provide Aquamer, Inc. with a Material  Return Authorization (MIRA) tracer number to be prominently displayed on the  shipping container for the defective Product. Once Partners in Biomaterials  authorizes the return of any defec­tive Product, Aquamer, Inc. shall ship such  Product, freight prepaid, in its original shipping container or in a container  of equivalent protective constitution.

**11.   CONFIDENTIALITY**

11.1   General.  Partners in  Biomaterials and Aquamer, Inc. shall each hold in confidence and not disclose  to any third party during the term of this Agreement and for a period of five  (5) years thereafter, unless authorized in  advance in writing any product, technical, manufacturing, process, marketing,  financial, business or other intonation, ideas, or know-how delivered by the  other party and identified in writing as confidential or oral information  disclosed by one party to another pursuant to this Agreement, provided that  such information is designated as confidential at the time of disclosure and  within thirty (30) days after its oral disclosure is reduced to a written  summary by the disclosing party, which summary is marked in a manner to  indicate its confidential nature and delivered to the receiving party  (collectively "Confidential Information").

11.2     Each party agrees that it  will not use any Confidential Information received from the other except for  the purposes of this Agreement.

11.3    Each party shall immediately  advise the disclosing party of any disclosure, loss or use of Confidential  Information in violation of this Agreement.

11.4    Protection  of Confidential Information. Each party shall implement reasonable  procedures to prohibit the disclosure, unauthorized duplication, use or removal  of such Confidential Information and shall not disclose Confidential  Information received from the disclosing party to any third party except its  affiliates and sublicensees, and then only as may be necessary and required in  connection with the rights and obligations of such party under this Agreement,  and subject to confidentiality obligations at least as protective as those set  forth herein. Without limiting the foregoing, each of the parties shall use at  least the same procedures and degree of care which it uses to prevent the  disclosure of its own proprietary information to prevent the disclosure of  Confidential Information.

11.5    Public Disclosures.  Each party shall provide to the other party copies of any proposed publication  or abstract reporting on the Patent Rights prior to submission of such  documents. Proposed publications shall be supplied at least sixty (60) days in  advance of submission to a journal, editor or other third party, and proposed  abstracts at least thirty (30) days prior to such submission in either case  unless such submission is not reasonably practicable and disclosure is required  by law or regulation, in which case, as soon as reasonably possible.  In  addition, the topic and contents of any proposed oral disclosures regarding the  Patent Rights which will be made to third persons by either party shall be  disclosed in writing to the other party at least thirty days prior to any  proposed oral presentation. The other party shall have thirty (30) days after  receipt of such proposed publications and disclosures to review them. At either  party’s request, the other party will delay submitting abstracts or manuscripts  or making public presentations for up to thirty (30) days to allow for the  filing of patent applications. Each party agrees that it will honor the other  party’s reasonable requests to remove or modify the Confidential Information  included in any such proposed public disclosure.

11.6    Exceptions.  Notwithstanding the above, Confidential Information shall not include  information which: (i) was generally known and available in the public domain  at the time it was disclosed, or becomes generally known and available in the  public domain through no fault of the receiving party; (ii) was known to the  receiving party at the time of disclosure, as shown by written records; (iii)  is disclosed with the prior written approval of the disclosing party; (iv) was  independently developed by the receiving party without the use of or reliance  on any Confidential Information, as shown by written records prepared  contemporaneously with such independent development; (v) becomes known to the  receiving party from a third party without any obligation of confidentiality to  the disclosing party; (vi) is disclosed pursuant to the order or requirement of  a court, administrative agency, or other governmental body; provided, that the  receiver shall provide reasonable advance notice thereof to enable the owner to  seek a protective order or otherwise prevent such disclosure; or (vii) is  disclosed to attorneys, accountants or other advisors to such Party, or banks,  or another financing source (or their advisors) or in connection with a merger,  acquisition or securities offering, subject to a non-disclosure agreement.

**12.   LIMITATION  OF LIABILITY**

EXCEPT  FOR ANY DAMAGES ARISING OUT OF A BREACH BY EITHER PARTY OF SECTION 11, IN NO  EVENT SHALL EITHER PARTY’S LIABILITY ARISING OUT OF THIS AGREEMENT OR THE  TERMINATION OF THIS AGREEMENT EXCEED THE AMOUNTS RECEIVED BY PARTNERS IN BIOMATERIALS  HEREUNDER. IN NO EVENT SHALL EITHER PARTY BE LIABLE FOR COSTS OF PROCUREMENT OF  SUBSTITUTE PRODUCTS OR SERVICES. IN NO EVENT SHALL EITHER PARTY HAVE ANY  LIABILITY FOR INDIRECT, INCIDENTAL, SPECIAL, OR CONSEQUENTIAL DAMAGES, HOWEVER  CAUSED AND ON *ANY*THEORY OF LIABILITY, ARISING OUT OF THIS AGREEMENT,  INCLUDING BUT NOT LIMITED TO LOSS OF ANTICIPATED PROFITS, EVEN IF SUCH PARTY  HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THESE LIMITATIONS SHALL  APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.

**13.  ****REPRESENTATIONS AND WARRANTIES**

13.1  Aquamer,  Inc. represents and warrants on a continuing basis that: (i) it has the  right to enter this Agreement, is a corporation duly organized, validly  existing, and in good standing under the laws of Delaware, (ii) has the power  and authority to execute and deliver this Agreement and to perform its  obligations hereunder, (iii) has by all necessary corporate action duly and  validly authorized the execution and delivery of this Agreement and the  performance of its obligations here­under, and (iv) there are no actions,  suits, investigations, claims or proceedings pending or threatened in any way  relating to the Products in the field of dermatology, urology, and  gastroenterology.

13.2   Partners  in Biomaterials represents and warrants on a continuing basis that: (i) it owns  U.S. Patent Nos. 5,116,371 and 5,713,960 which cover the Products, (ii)  Partners in Biomaterials developed its method of manufacturing the Products  wholly on its own and did not use any trade secret technology of third parties,  (iii) Partners in Biomaterials has the right to provide the Products free and  clear of any lien, encumbrance or security interest, (iv) Partners in  Biomaterials has the right to enter this Agreement, is a corporation duly  organized, validly existing and in good standing under the laws of the State of  California, (v) has the power and authority, to execute and deliver this  Agreement and to perform its obligations hereunder, (vi) it has by all necessary  corporate action duly and validly authorized the execution and delivery of this  Agreement and the performance of its obligations hereunder, and (vii) it has to  and will not during the term of this Agreement enter into any agreement which  conflicts with or which will result in any breach of, or constitute a default  under, any note, security agreement, commitment, contract or other agreement,  instrument or undertaking to which Partners in Biomaterials is a party. 

13.3   Each signator to this  Agreement personally warrants that he or she is authorized by his or her  respective party to execute this Agreement.

13.4   Effect  of Representations and Warranties.  It is understood that if the  representations and warranties under this Article 14 are not true and accurate  at any time during the term of the Agreement and the nonbreaching party (i.e.,  Partners in Biomaterials or Aquamer, Inc., as the case may be) incurs any  liabilities, costs or other expenses as a result of such falsity, the breaching  party  shall indemnify and hold harmless the other party and its affiliates for  any such liabilities, costs or expenses incurred to the limit stated in Section  12. 

**14. TERM AND  TERMINATION**

14.1   Term.   This Agreement shall commence on the Effective Date and shall have a term of  twenty-five (25) years unless terminated earlier as provided herein; provided,  however, if Aquamer, Inc. does not receive FDA approval for the sale of the  Product within four (4) years of the Effective Date of the Agreement, the  Agreement shall automatically be extended for one additional two (2) year  period.

14.2   Termination  for Cause.  Either party may, without penalty, terminate this Agreement or  cancel any purchase order or portion thereof effective upon written notice to  the other party in the event of one of the following events:

(a)   The other party materially breaches this Agreement, including, without  limitation, by failing to deliver conforming Products on the requested delivery  dates set forth on Aquamer, Inc.’s purchase orders, and such breach remains  uncured for thirty (30) days following written notice of breach by the  nonbreaching party, unless such breach is incurable in which event termination  shall be immediate upon receipt of written notice; provided, however, that in  the event Partners in Biomaterials, Inc. makes more than one late delivery in a  six (6) month period, Aquamer, Inc. shall have the right to procure Products  from third parties for a period of one year;

(b)   non-payment of invoices for greater than 120 days

(c   inability to produce Product in a facility which complies with  ISO/FDA requirements pursuant to a written notice from ISO or the FDA   

(d)   A petition for relief under any bankruptcy statute is filed by or  against the other party, or the other party makes an assignment for the benefit  of creditors, or a receiver is appointed for all or a substantial part of the  other party’s assets, and such petition, assignment or appointment is not  dismissed or vacated within sixty (60) days. 

14.3  Permissive Termination.  

(a)   Partners  may terminate this agreement by giving twelve (12) months written notice to  Aquamer.  

(b)   Aquamer may, within the first nine (9) months of the  notice period set forth in Par. 14.3(a), purchase a written description of the  process and a non-exclusive worldwide and perpetual license to use the process  and and manufacture the product, upon a payment of eighty thousand dollars  ($80,000.00).

14.4   Effect  of Termination or Expiration.

(a)   In the  event of a termination or expiration of this Agreement the provisions of this  Agreement shall continue to apply to all purchase orders accepted by Partners  in Biomaterials prior to the effective date of such termination or expiration.  Termination or expiration of this Agreement shall not relieve or release either  party from making payments which obligation has accrued prior to such  termination.

 (b)  In the  event of the default by either Party, the non-defaulting party may take any  reasonable steps which the non-defaulting party deems appropriate and which are  authorized by law or this Agreement to obtain the benefit of its bargain  pursuant to this Agreement in addition to or in lieu of the termination  procedure set forth in this Paragraph.

14.5   Survival.   Sections 6, 10, 11, 13, 14, 15, and 16  shall survive the termination of this  Agreement for any reason.

**15.   DISPUTE  RESOLUTION**

If a dispute arises between the  parties relating to the interpretation or performance of this Agreement or the  grounds for the termination thereof, representatives of the parties with  decision-making authority shall meet to attempt in good faith to negotiate a  resolution of the dispute prior to pursuing other available remedies.  Such  meeting shall occur within twenty (20) days of a party requesting such  meeting.  Partners in Biomaterials and Aquamer, Inc. agree that any dispute or  controversy between the parties hereto arising out of, in relation to, or in  connection with this Agreement, or the validity, enforceability, construction  performance or breach thereof, shall be finally settled by binding arbitration  in Los Angeles, California, United States of America, under the then-current Licensing Agreement Rules of the American Arbitration Association by one (1) arbitrator  appointed in accordance with such Rules. The rules of discovery determined by  the arbitrator shall apply thereto. The parties agree that judgment upon the  decision and/or award rendered by the decision may be entered in any court of  competent jurisdiction. The parties agree that, any provision of applicable law  notwithstanding, they will not request, and the arbitrator shall have no  authority to award, punitive or exemplary damages against any party. The costs  of the arbitration, including administrative fees and fees of the arbitrator,  shall be shared equally by the parties. Each party shall bear the cost of its  own attorneys’ fees and expert fees.

**16.   MISCELLANEOUS**

16.1   Independent  Contractors.  The relationship of Partners in Biomaterials and Aquamer,  Inc. established by this Agreement is that of independent contractors, and  nothing contained in the Agreement shall be construed to (i) give either party  the power to direct and control the day-to-day activities of the other, (ii)  constitute the Parties as partners, joint venturers, co-owners or otherwise as  participants in a joint or common undertaking, or (iii) allow either party to  create or assume any obligation on behalf of the other party for any purpose  whatsoever.

16.2   No  Restriction on Competition.  Notwithstanding any provision within this Agreement,  nothing herein contained shall be interpreted so as to limit the rights of the  Parties in the development, manufacture or sale of any other product(s) which  may directly or indirectly compete with the Products, the Specified Use, or any  other product or application of either Party.

16.3   Governing Law.  This Agreement shall be governed by the laws of California, without reference to principles of conflicts of laws.

16.4   Compliance with Laws.  Both Parties shall perform this Agreement in  compliance with all applicable federal, state and local laws, rules and  regulations. Each party shall indemnify the other party for loss or damage  sustained because of the first party’s noncompliance with any such law, rule or  regulation. Each party shall furnish to the other party any information  requested or required by the first party during the term of this Agreement or  any extensions hereof to enable the first party to comply with the requirements  of any U.S. or foreign federal, state and/or government agency.

16.5   Aquamer, Inc. Trademarks.  Aquamer, Inc., in its sole discretion, may  select the trademarks, trade names and trade dresses to be used in connection  with each Product and all such trademarks, trade names and trade dresses shall  be and become the exclusive property of Aquamer, Inc.. Partners in Biomaterials  shall not adopt any trademark, trade name or trade dress that may be  confusingly similar therewith. Partners in Biomaterials shall acquire no  interest or rights in and to any trademarks, trade names and trade dresses  selected or used by Aquamer, Inc.. Aquamer, Inc. shall have the right to remove  any Partners in Biomaterials trademarks incorporated or marked on, or fixed to  the Products.

16.6   No Use of Names.  Neither party will use the name of the other in its  advertising or promotional materials without the prior written consent of such  other party.

16.7   Force Majeure.  Neither party shall be held responsible for any delay or  failure in performance hereunder caused by strikes, embargoes, unexpected  government requirements, civil or military authorities, acts of God, or by the  public enemy or other causes reasonably beyond such party’s control and without  such party’s fault or negligence.

16.8   Notices.   All notices or reports permitted or required under this Agreement shall be in  writing and shall be delivered in person, mailed by first class mail, postage  prepaid, (registered or certified) to the party to receive the notice at the  address set forth at the beginning of this Agreement or such other address as  either party may specify in writing. All such notices shall be effective upon  receipt.

16.9   Assignment.   The Parties shall not assign, to any unaffiliated entity or person, any of  their rights or obligations under this Agreement without the prior written  consent of the other Party, which consent shall not be unreasonably withheld.

16.10  Severability.   If any provision(s) of this Agreement shall be held invalid, illegal or  unenforceable by a court of competent jurisdiction, this Agreement shall  continue in full force and effect without said provision.

16.11   Modification:  Waiver.  This Agreement may not be altered, amended or modified in any way  except by a writing signed by both Parties. The failure of a party to enforce  any provision of the Agreement shall not be construed to be a waiver of the  right of such party to thereafter enforce that provision or any other provision  or right.

16.12   Entire  Agreement.  This Agreement and the exhibits hereto represent and constitute  the entire agreement between the Parties and supersede all prior agreements,  amendment and understandings with respect to the matters covered by this  Agreement.

AQUAMER, INC.                                                       PARTNERS  IN BIOMATERIALS, INC

By:             /s/ Edwin A. Reilly                                                By:       /s/ Robert Ainpour                    

Print Name:  Edwin A. Reilly                                                  Print  Name:  Robert Ainpour                  

Title:   President                                                                      By:       /s/ James Christensen                

                                                                                               Print  Name:  James Christensen             

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**EXHIBIT A**

**DESCRIPTION OF PRODUCT**

         The  polymeric material is a hydrogel comprising of a copolymer of three chemicals;  I) polyvinylpyrrolidinone (PVP), ii) a derivative of PVP, and iii) an acrylic.   The polymer formulation is also derived by the addition of an initiator and a  cross-linker.  Physicial properties include percent water content greater than  90%, pH between 6.5 and 8.5 and viscosity less than 500 cps at 1000 sec-1.

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**EXHIBIT B**

**COMMERCIAL PRODUCT PRICING SCHEDULE**