Document:

LICENSING
      AND DISTRIBUTION AGREEMENT 

    
      

    

    

    Agreement
      made this 6th day
      of
      June, 2007, between Laboratoires Carilène S.A.S a corporation existing under the
      laws of France, and having its principal place of business at 7, rue du Chant
      des Oiseaux, 78360 Montesson-France (hereinafter referred to as “Supplier”),
and
      Auriga Laboratories, Inc.,
      existing
      under the laws of the State of Delaware, U.S.A,
      having
      its principal place of business at 2029 Century Park East, Suite 1130, Los
      Angeles, CA 90067 U.S.A.
      (hereinafter referred to as “Buyer”).

    

    WITNESSETH
      :

    

    WHEREAS,
      The
      Supplier desires to sell and the Buyer desires to buy the Product defined below
      and described in Exhibit C hereto; and

    

    WHEREAS,
      The Supplier
      is willing to furnish all of Buyer’s requirements for the Product and Buyer is
      willing to purchase all of its requirements for the Product from Supplier,
      subject to Supplier’s ability to meet Buyer’s demand for the Product;
      and

    

    WHEREAS,
      The Buyer shall be the exclusive distributor of the Product in the Territory.
      Supplier
      is the exclusive owner of an invention relating to the use in treatment for
      alopecia and the subject of United States Patent No. 6,001,378 and subject
      to a
      PCT filing number PCT/FR97/00141 filed January 24, 1997, as listed in Exhibit
      D
      attached hereto, and all claims therein, that covers the Product (hereinafter
      called the “Invention’); and

    

    WHEREAS,
      The Supplier
      will transfer to the Buyer the Information, as well as scientific and marketing
      data which are essential to the manufacture and commercial exploitation of
      the
      Product.

    

    NOW
      THEREFORE, this
      Agreement witnesses that for and in consideration of the respective covenants
      and agreements herein contained, it is agreed by and between the parties as
      follows:

     

    
      
        

      

    

    ARTICLE
      1

    DEFINITIONS

    
      
        

      

    

    

    
      	
              1.1.

            	
              Definitions.
                For the purpose of this Agreement or any amendment thereto, the following
                terms shall have the following meanings,
                respectively :

            

    

    

    1.1.1.
      “Product(s)” shall mean combinations, in particular for use as the active
      principle in a cosmetic and particularly dermatological composition, containing
      peroxidised lipids and organosilicon compounds containing them, as well as
      their
      applications, including but not limited to the combination known in Europe
      as
“Silicium 44 Lotion” and “Silicium 44 Shampoo” as covered by the Patent and all
      other Supplier intellectual property rights and as further described in Exhibit
      C and covered by the Patent listed in Exhibit D. Product shall include all
      successor products and all line extensions, upgrades, new formulations and
      the
      like. Product shall also include sample packages as mutually agreed to between
      the parties from time to time.

    

    1.1.2.
      “Territory” shall mean the United States of America and its possessions and
      territories

    

    1.1.3.
      “Information” shall mean all trade secrets, data, information and know-how
      related to the Invention, Product and the Patent.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    1.1.4.
      “Patent” means the U.S.A. Patent No. 6,001,378, as described above and further
      described in Exhibit D, including all divisionals, reissuances, reexaminations,
      foreign counterparts and the like.

    

    1.1.5
      Transfer price shall mean the price in EURO, paid by the Buyer to Supplier
      for
      the Product as described below in Article 5.4

    

    1.1.6
      “FCA” shall have the meaning ascribed thereto in INCOTERMS 2000 of the
      International Chamber of Commerce, meaning, among other things, that Supplier
      shall deliver the goods cleared for export, at Supplier’s expense, and Buyer
      shall clear, at its expense, the goods for import into the
      Territory.

    

    1.1.7
      “Quality Assurance Agreement”: The Quality Assurance Agreement shall ensure all
      applicable governing laws, rules and regulations including but not limited
      to
      those relating to Good Manufacturing Practices (GMPs) and under the European
      guide line of registration of Cosmetic file (see appendix). 

    

    1.1.8
      “Manufacturing Package” means all Information and instructions necessary to
      enable a third party to manufacture the Product if permitted pursuant to this
      Agreement.

    

    1.1.9
      “Net Sales” means all amounts actually received by the Buyer as a results of its
      sales of Products less all the deductions for discounts, products

    Rebates,
      forces or mandated wholesales/distributors fees, rebates to other government
      agencies or purchasing associations, returns, charges back and imported fess.
      These rebates cannot exceed 15% of gross sales.

     

    
      
        

      

    

    ARTICLE
      2

    REQUIREMENTS
      AND EXCLUSIVITY 
      
        

      

    

    

    2.1.
      License. Except
      as
      otherwise explicitly provided for in this Article 2, Supplier hereby grants
      to
      Buyer the exclusive (even as to Supplier) right, under all applicable worldwide
      intellectual property rights, to sell, market, distribute, sublicense and
      exploit the Product in the Territory under The trade name of Silicium 44 (Lotion
      and Shampoo). Except as otherwise explicitly provided for in this Article 2,
      Buyer is also hereby granted an exclusive right and license, under all
      applicable worldwide proprietary rights, to make, have made, use, sell, have
      sold, market, distribute, sublicense and manufacture the Product, but only
      if
      and when expressly authorized under the terms and conditions of this Agreement.
      

    

    2.2 Sale
      of Requirements.
      During
      the term of this Agreement, Supplier agrees to sell to Buyer all of Buyer’s
      requirements of the Product in accordance with the terms of this Agreement.
      If
      Supplier is unable to supply all of Buyer’s requirements, Supplier shall, as
      Buyer’s sole remedy, use commercially reasonable efforts to provide Buyer, at
      prices at or lower than those set forth in this Agreement, with the Product
      from
      other sources to avoid out-of-stock situations. Notwithstanding the foregoing,
      if Supplier is unable to supply Buyer’s requirements two (2) or more times
      during a ninety (90) day period, then Buyer shall have the right to require
      qualification of a second manufacturer, of Buyer’s choice, to manufacture the
      Product for Buyer by using the Manufacturing Package. Such additional
      manufacturer shall be subject to the confidentiality restrictions set forth
      herein.

    

    2.2.1
      Purchase of Requirements.
      During
      the term of this Agreement, Buyer agrees to buy from Supplier all of Buyer’s
      requirements for the Product in accordance with the terms of this
      Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    2.3.
      Exclusivity.
      During
      the term of this Agreement, except with respect to, Supplier agrees not to
      distribute or sell the Product directly or indirectly to any other party for
      the
      purpose of use or sale in the Territory in accordance with Article 2.1. If
      during the Term of the Agreement, Buyer at any time notifies Supplier that
      a
      party is distributing or selling Product in the Territory Supplier agrees that
      it will take all action necessary to immediately halt all sales (direct and
      indirect) of Product to such party that is distributing or selling in the
      Territory providing that the source of the product is identified to be the
      Supplier. In the event any damages are recovered as a result of Supplier’s
      actions, after reimbursing Supplier its reasonable costs to take such action,
      all remaining proceeds shall belong to Buyer, subject to the royalty set forth
      in Article 5.3 If the source of the Product is other than Supplier, then Buyer
      shall have the right, by virtue of the exclusive license granted in Article
      2.1,
      to take action against such third party, and all proceeds of any such action
      shall belong solely to Buyer, subject to the royalty set forth in Article
      5.3.

     

    2.4.
      No Sales Outside the Territory.
      Buyer
      shall not, without the prior written approval of Supplier (to be granted or
      withheld in Supplier’s sole and absolute discretion), directly or indirectly
      sell Product outside the Territory, advertise, promote or solicit customers
      for
      Product outside the Territory, establish any office outside the Territory
      through which orders are solicited or establish any depot at which inventories
      of Product are stored outside the Territory.

    

    2.5 Right
      of First Refusal.
      In the
      event Supplier decides to grant an exclusive right to distribute and sell any
      further Supplier products in the Territory, and such products are not included
      under the definition of Products set forth in this Agreement, Supplier shall
      provide Buyer the first opportunity to obtain such exclusive right for such
      products upon mutually agreed upon terms and conditions. Upon receiving
      information regarding new Products, Buyers shall have 90 days to exercise right
      of first refusal.

     

    
      
        

      

    

    ARTICLE
      3

    REPRESENTATIONS
      
      
        

      

    

    

    3.1.
      Representations of Supplier.
      The
      Supplier represents that:

    

    3.1.1.
      Supplier
      is the exclusive owner of all rights, title and interest in and to the
      Invention, Patent, and Information, and has the right to grant to Buyer the
      rights and licenses set forth in this Agreement. The Invention and Products
      are
      completely safe for human use and does not have any direct or indirect adverse
      health effects.

    

    3.1.2.
      As
      of the
      date of this Agreement, other than the Patent, Supplier has not filed, or caused
      to be filed in the U.S., patent applications, or obtained in its name or caused
      to obtain in the name of others, any other patent based on or relating to the
      Invention, Information or devices or methods similar to the
      Invention.

    

    3.1.3.
      Supplier
      has, and will continue to, comply with all applicable laws, rules and
      regulations with respect to the development, manufacture, sale, use and
      distribution of the Product (“Laws”).

    

    3.2.
      Information.
      Supplier shall furnish to Buyer, or its nominees, any Information reasonably
      required (as determined by Supplier and Buyer) by Buyer to commercialise and
      exploit the use of the Invention and the Products permitted under this
      Agreement, including without limitation the clinical data and related materials
      that were conducted on the Invention and/or Products.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    3.3.
      Buyer
      represents that Buyer (i) will adhere to all applicable laws, rules and
      regulations, relating to the sale of Product in the Territory; and (ii) will
      store the Product in appropriate conditions and facilities (as instructed by
      Supplier).

     

    
      
        

      

    

    ARTICLE
      4

    GENERAL
      OBLIGATIONS 

    
      

    

    

    4.1.
      Buyer’s Obligations.
      Marketing
      and distribution.
      In
      addition to any and all other obligations and liabilities of Buyer as provided
      in this Agreement, Buyer or Buyers successors shall use commercially reasonable
      efforts to promote and market the Product for sale according to the business
      plan covering the first 3 years communicated to Supplier. 

    

    4.2 Supplier’s
      Obligations.

    

    4.2.1.
      Lead time:
      Lead
      time for Products ordered hereunder shall be 16 weeks for the first order after
      reception of the final art work data signed by both supplier and buyer, and
      then
      16 weeks after receipt of all other orders. Shipment time by ocean shall be
      4/5
      weeks; by air-freight shall be 1 week. Shipment time shall be added to lead
      time
      for purposes of scheduling delivery. 50% of total billing for the first order
      only, will be paid by money bank transfer at order time. 

    

    4.2.2.
      Supplier
      shall provide Buyer with a Certificate of Analysis for batches of Product by
      facsimile three (3) working days prior to shipment. Original copies of the
      Certificates of Analysis shall be sent regular mail. 

    

    4.2.3.
      Supplier
      shall provide Buyer with a copy of the bill of lading by facsimile upon
      shipment.

    

    4.3 Manufacturing
      Rights.
      In the
      event Supplier admits in writing its inability to pay its debts generally as
      they become due, files an assignment or a petition in bankruptcy, as the case
      may be, or a petition to take advantage of any insolvency statute, makes a
      general assignment for the benefit of its creditors, consents to the appointment
      of a receiver of itself or of the whole or any substantial part of its property,
      undertakes its liquidation, winding-up or dissolution, or enters into an
      arrangement or composition with or for the benefit or creditors generally
      occurring in circumstances in which it is unable to meet its obligations as
      they
      fall due, then Buyer shall have a non-exclusive right and license to use the
      Manufacturing Package and to select a third party to manufacture the Product
      for
      continued distribution in the Territory. In the event Buyer exercises its rights
      under this Section 4.3, all royalties payable hereunder shall remain unchanged.
      Supplier shall place the Manufacturing Package in escrow pursuant to a mutually
      agreed upon escrow agreement that enables release of the Manufacturing Package
      upon written notice of the occurrence of any of the foregoing release
      conditions. When Supplier recovers it’s total ability to run it’s business
      normally, the Buyer’s manufacturing rights under this Section 4.3 shall
      terminate and the provisions, terms and conditions of this Agreement shall
      be in
      full force and effect.

     

    
      
        

      

    

    ARTICLE
      5

    PRICE
      AND TERMS 
      
        

      

    

    

    5.1.
      Payments
      : In
      consideration of the exclusive license granted in Article 2.1, upon receipt
      of
      Product pursuant to orders by Buyer, Buyer shall pay to Supplier a non
      refundable premium of USD $1.5 million in accordance with the following payment
      schedule:

    (i)
      US$
      250 000 upon the commercial launch of the product in the
      US

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (ii)
      US$
      500 000 on or before the 90th
      day
      after commercial launch of the product in the US

    (iii)
      US$
      750 000 upon the earlier twelve month after the commercial launch of the
      Product or at the time that Buyer achieves £ 5 000 000 of net Sales in
      the first year.

    

    5.2
      The
      transfer price of the two presentations, SILICIUM (Lotion & Shampoo) are
      defined as below and calculated in a USA$ with a fix exchange rate as specified
      in the article 5.4

    

    (i). EURO
      3.80
      per bottle of Silicium 44 Lotion,

    (ii). EURO
      2.80
      per bottle of Silicium 44 Shampoo.

    

    Buyer
      shall pay these amounts to Supplier in US Dollars at the then existing Transfer
      Price as calculated in Section 5.4.

    

    5.2.
      Minimum Batch size : The
      minimum batch size for stock
      bottles of either the Silicium 44 Lotion or Silicum 44 Shampoo shall be 50,000
      units per product.

    

    5.3
      Royalties: Buyer will pay royalties equal to five percent (5 %) on Net Sales.
      Royalties will be calculated for the first six months after initial distribution
      by Buyer and every six months thereafter. Royalty is to be paid 60 days
      following the determination period to Supplier

    

    5.4. Transfer
      Price: The
      official exchange rate applied on May 15th,
      2007
      will be applied all through the year 2007/2008 : 1€ = $ 1.36.  For
      the
      first twelve months of the term of this Agreement the Transfer Price shall
      be as
      set forth in Exhibit B. After the initial 24 months of exploitation of the
      product, the Transfer Price may be negotiated on an amicable basis following
      cost increase of raw materials, energy and labour; provided, however, that
      if
      agreement regarding the Transfer Price is not reached after good faith
      negotiations, then the Transfer Price from the most recent year shall be used
      for the current year.

    

    5.5.
      Price Decreases:
      Supplier
      shall use all commercially reasonable efforts to reduce the prices charged
      to
      Buyer hereunder for the Products. If such prices can be reduced as a result
      of
      market forces or cost reduction strategies identified by Supplier, then 50%
      of
      the amount of such price reduction shall be applied to the prices paid by Buyer
      hereunder. If prices can be reduced as a result of cost reduction strategies
      identified by Buyer, then 100% of the amount of such reduction shall be applied
      to the prices paid by Buyer hereunder. 

    

    5.6
      Transport and Product Insurance : All
      risk
      of damage to or loss or delay of the Product shall pass to Buyer upon Supplier’s
      delivery at the FCA pick-up point to a common carrier. Buyer shall insure each
      shipment of the Product with a reputable insurer for the full invoice value
      of
      such shipment. Such insurance shall provide for full coverage from the time
      the
      Product are delivered from the FCA pick-up point until Buyer shall have paid
      Supplier in full for such Product.

    

    5.7.
      Payment Terms :
      The
      Buyer shall be invoiced for purchases of Product with a payment term of 30
      days
      from evidence of shipment. All invoices shall be paid by Buyer within thirty
      (30) days of receipt by bank transfer only.

    

    5.8.
      Forecasts
      : Buyer
      agrees to provide Supplier with a twelve (12) month non-binding forecast
      indicating Buyer’s estimated intended purchases of Product during each calendar
      quarter of such period. Such forecast shall be updated by Buyer on a rolling
      basis for a new twelve (12) month period, which updated forecast must be
      received by Supplier no later than thirty (30) days prior to the first day
      of
      each succeeding calendar quarter. Such rolling forecasts by Buyer are required
      to meet the lead times required by certain of Supplier’s suppliers as
      communicated to Buyer by Supplier.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    5.9.
      Minimum Purchase Requirements for USA.
      In
      order to maintain its exclusive distribution license in accordance with Article
      2.1, Buyer shall purchase the following minimum amounts of the Product from
      Supplier during the term of this Agreement. 

    

    5.9.1.
      During
      the first twelve (12) month period, Buyer will purchase at least Fifty Thousand
      (50,000) units of each Product to maintain exclusivity.

    

    5.9.2.
      During
      the second twelve (12) month period, Buyer will purchase at least Eighty
      Thousand (80,000) units of each Product to maintain exclusivity.

    

    5.9.3.
      During
      the third twelve (12) month period, Buyer will purchase at least One Hundred
      Twenty Thousand (120,000) units of each Product to maintain
      exclusivity.

    

    5.9.4.
      During
      the fourth twelve (12) month period, and for each twelve (12) month period
      thereafter, Buyer will purchase at least One Hundred Fifty Thousand (150,000)
      units of each Product to maintain exclusivity.

    

    5.9.5.
      Failure to achieve the above targets for two consecutive years, could result
      in
      the loss of exclusive rights to the Product in the Territory (whereupon Supplier
      shall give Buyer 90 days prior written notice of such loss of exclusive rights).
      Notwithstanding the foregoing, Buyer shall have the right to “buy out” the
      Minimum Purchase Requirement for any given year by paying to Supplier the amount
      of royalty that would have been paid to Supplier had Buyer met the applicable
      Minimum Purchase Requirement, based on Buyer’s sales price in effect at the
      time.

     

      
        

      

    

    ARTICLE
      6

    TRADEMARKS
      
      
        

      

    

     

    

    6.1.
      Use of Trademarks.
      Buyer
      can market Product in the Territory preferably under SILICIUM 44 Trade mark.
      If
      the Buyer uses its own trademarks and trade names; provided, however, Buyer
      shall include notices on each Product stating the issued US Patent number and
      Supplier’s ownership rights, as well as being identified as the manufacturer of
      the finished product or use Supplier’s trade name free of charge. Buyer is
      granted a non-exclusive right and license to use Supplier’s trademarks and trade
      names for the purpose of marketing and distributing the Products in the
      Territory. Supplier shall label the Product in accordance with Buyer’s
      instructions, as may be updated from time to time.

    

    In
      case
      Buyer chooses it’s own trademark, Buyer, at its own expense, shall be
      responsible for the selection, registration and maintenance of the brand name
      to
      be used with respect to the Product and shall own and control such trademark.
      All goodwill arising as a result of such trademark shall inure solely to the
      benefit of Buyer.

    

    6.2 Right
      of First Refusal.
      If (a)
      Buyer undergoes a change of owner, dissolution, or acquisition of the Buyer,
      and
      (b) the new owner or controlling entity indicates its intent not to continue
      to
      market the Trademark or Trade name for the Products, the Supplier has the right
      of first proposal, first refusal to acquire, at preferred rate, the Trademark
      and Trade names.

    

    ARTICLE
      7

    TERM
      AND TERMINATION 
      
        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    7.1.
      Term.
      This
      Agreement shall take effect as of the date first above written, and unless
      earlier terminated as otherwise provided in this Agreement, shall continue
      in
      force until the expiration of the Patent so long as Buyer has purchased the
      minimum requirements set forth in Section 5.9.

    

    7.2.
      Termination.
      This
      Agreement may be terminated in accordance with the following
      provisions:

    

    7.2.1.
      Either
      party may terminate this Agreement by giving notice in writing to the other
      party should an event of Force Majeure continue to affect the other party hereto
      uninterrupted for more than six (6) months as provided in Section 8.5
      below;

    

    7.2.2.
      Either
      party may terminate this Agreement by giving notice in writing to the other
      party in the event the other party is in material breach of a material provision
      this Agreement and such breaching party shall have failed to correct such breach
      within thirty (30) days of receipt from the other party of written notice
      describing with specificity such breach (and if such breach is not reasonably
      corrected within such 30 days, such breaching party must have at least
      undertaken within such 30 day period reasonable steps to correct such breach
      after such 30 day period in order to prevent such termination).

    

    7.3.
      No compensation.
      In the
      event either party terminates this Agreement in accordance with the terms
      hereof, the parties hereby agree that neither party shall be entitled to any
      compensation or like payment from the other party or any affiliate of the other
      party as a result of such termination.

    

    7.4.
      Upon
      termination or expiration of this Agreement in accordance with its terms, Buyer
      shall within 160 days thereafter immediately cease to sell and/or distribute
      the
      Product. Further, upon termination or expiration of this Agreement, subject
      to
      the foregoing sentence, each party shall return or destroy the other party’s
      Confidential Information (as defined below).

    

    
      
        

      

    

    ARTICLE
      8

    FORCE
      MAJEURE 
      
        

      

    

    

    8.1.
      Definition.
“Force
      Majeure” shall mean any event or condition not reasonably within the control of
      either party which prevents in whole or in material part the performance by
      one
      of the parties of its obligations hereunder or which renders the performance
      of
      such obligations so difficult or costly as to make such performance commercially
      unreasonable. Without limiting the foregoing, the following shall constitute
      events or conditions of Force Majeure; acts of State or governmental action,
      riots, war, strikes, prolonged extreme slowdowns, prolonged extreme shortage
      of
      energy supplies, epidemics, fire, flood, hurricane, typhoon, earthquakes,
      lightning and explosion; provided, however, a Force Majeure event shall not
      limit Buyer’s obligation to make payments to Supplier for Product. It is in
      particular expressly agreed that any refusal or failure of any governmental
      authority to grant any authorization, approval or license legally required
      for
      the fulfillment by Supplier of its obligations hereunder shall constitute an
      event of Force Majeure.

    

    8.2.
      Notice.
      Upon
      giving notice to the other party, a party affected by an event of Force Majeure
      shall be released without any liability on its part from the performance of
      its
      obligations under this Agreement, except for the obligation to pay any amounts
      due and owing hereunder, but only to the extent and only for the period that
      its
      performance of such obligation is prevented by the event of Force Majeure.
      Such
      notice shall include a description of the nature of the event of Force Majeure,
      and its cause and possible consequences. The party claiming Force Majeure shall
      promptly notify the other party of its termination of such
      event.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    8.3.
      Confirmation.
      The
      party invoking Force Majeure shall provide to the other party confirmation
      of
      the existence of the circumstances constituting Force Majeure. Such evidence
      may
      consist of statement or certificate of an appropriate governmental department
      or
      agency where available, or a statement describing in detail the facts claimed
      to
      constitute Force Majeure.

    

    8.4.
      Suspension of Performance.
      During
      the period that the performance by one of the parties of its obligations under
      this Agreement has been suspended by reason of an event of Force Majeure, the
      other party may likewise suspend the performance or all or part of its
      obligations hereunder to the extent that such suspension is commercially
      reasonable.

    

    8.5.
      Termination.
      Should
      the period of Force Majeure continue for more than sixty (60) consecutive days,
      the party not suffering the Force Majeure may terminate this Agreement without
      liability to the other party, except for payments due to such date, upon giving
      written notice to the other party.

     

    
      
        

      

    

    ARTICLE
      9

    PRODUCT
      LIABILITY 
      
        

      

    

    

    9.1.
      Supplier
      Product Liability Insurance. Supplier
      is the supplier of the finished consumer Product, and bears all products
      liability risk associated therewith. Supplier
      shall maintain and shall require all of its subcontractors and manufacturers
      to
      maintain Commercial General Liability insurance with a limit of not less than
      $1
      million per each occurrence and $2 million aggregate. Such insurance shall
      be
      maintained from the inception of this Agreement until 9 months following
      termination of this Agreement. 

    

    Supplier
      shall provide certified copies of each policy providing the such insurance
      upon
      Buyer’s request at any time (and such certificates shall (1) clearly evidence
      all such coverage and specific evidence of a separate commercial general
      liability endorsement adding such additional insured, and (2) provide that
      such
      insurance shall not be modified, terminated or cancelled except on 30 days'
      prior written notice to Buyer. If Supplier for any reason, fails to maintain
      insurance coverage which is required pursuant to this Agreement, the same shall
      be deemed a material breach of contract and Buyer may, at its sole option,
      terminate this Agreement and obtain damages from Supplier resulting from said
      breach. (By requiring insurance herein, Buyer does not represent that coverage
      and limits will necessarily be adequate to protect Buyer and such coverage
      and
      limits shall not be deemed as a limitation on liability under the indemnities
      hereunder.) 

    

    9.2.
      Indemnity.
      Supplier shall indemnify, reimburse, and hold harmless Buyer, its affiliates,
      and their respective officers, directors, employees, agents, successors and
      assigns from and against any and all costs, losses, liabilities, damages,
      pending, threatened or concluded lawsuits, deficiencies, claims and expenses
      (including reasonable fees and disbursements of attorneys) (collectively, the
      “Damages”)
      to the
      extent such Damages are incurred in connection with or arise out of (i) any
      breach of any covenant or agreement of Supplier herein; (ii) the breach of
      any
      representation or warranty made by Supplier in this Agreement (without regard
      to
      materiality qualifiers contained in such representations or warranties);
      (iii) the negligence or willful misconduct of Supplier, its employees,
      agents or contractors; and (iv) the use or distribution of the Products,
      including without limitation any actual or alleged infringement of any third
      party intellectual property rights by the Products or Information, or the use,
      sale or distribution thereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    9.3
      Buyer
      Product Liability Insurance. Buyer
      shall maintain Commercial General Liability insurance with a limit of not less
      than $1 million per each occurrence and $2 million aggregate. Such insurance
      shall name Supplier and each of its members, managers, directors, officers
      and
      employees as an “additional insured.” Such insurance shall be maintained from
      the inception of this Agreement until 9 months following termination of this
      Agreement. 

    

    Buyer
      shall provide certified copies of each policy providing the such insurance
      upon
      Supplier’s request at any time (and such certificates shall (1) clearly evidence
      all such coverage and specific evidence of a separate commercial general
      liability endorsement adding such additional insured, and (2) provide that
      such
      insurance shall not be modified, terminated or canceled except on 30 days'
      prior
      written notice to Supplier. If Buyer for any reason, fails to maintain insurance
      coverage which is required pursuant to this Agreement, the same shall be deemed
      a material breach of contract and Supplier may, at its sole option, terminate
      this Agreement and obtain damages from Buyer resulting from said breach. (By
      requiring insurance herein, Supplier does not represent that coverage and limits
      will necessarily be adequate to protect Supplier and such coverage and limits
      shall not be deemed as a limitation on liability under the indemnities
      hereunder.) 

    

    
      
 ARTICLE
      10

    GOVERNING
      LAW, ETC. 
      

    

    

    10.1.
      Applicable Law.
      This
      Agreement shall be governed by, and shall be construed and enforced in
      accordance with, the internal laws of New York, USA, without regard to conflicts
      of laws provisions thereof and without regard to the United Nations Convention
      on Contracts for the International Sale of Goods. Any legal action or proceeding
      arising under this Agreement will be brought exclusively in the federal or
      state
      courts located in New York City, New York, and the parties hereby consent to
      the
      personal jurisdiction and venue therein.

     

    
      
 ARTICLE
      11

    MISCELLANEOUS
      

    

    

    11.1
      Assignment: Neither
      party shall have the right to assign or otherwise transfer its rights and
      obligations under this Agreement except with the prior written consent of the
      other party and consent shall not be unreasonably withheld; provided, however,
      that either party shall be entitled to assign any or all of its rights and
      obligations hereunder to any of its affiliates, or in the event of a merger
      or
      acquisition of substantially all of a party’s stock, assets or
      business.

    

    11.2 Limitation
      of Liability.
      Except
      in the event of a breach of any of the provisions of Article 2, Article 3,
      Article 11.3 of this Agreement, or liability under Article 9, neither party
      shall be liable to the other party or any third party for special, indirect,
      incidental, consequential or punitive damages of any kind or nature whatsoever,
      whether arising under contract, warranty, or tort (including negligence or
      strict liability) or any other theory of liability even if the possibility
      of
      such damages were disclosed to the other party or could have been reasonably
      foreseen. The limitations of liability reflect the allocation of risk between
      the parties. The limitations specified in this Section 11.2 will survive and
      apply even if any limited remedy specified in this Agreement is found to have
      failed of its essential purpose.

    

    11.3. Confidentiality.
      Both
      parties acknowledge that either may receive (the “receiving party”) Confidential
      Information (as defined hereinafter) from the other (the “disclosing party”)
      during the term of this Agreement, including information designated as
      confidential at the time of disclosure, or summarized in writing as Confidential
      Information within a reasonable time after disclosure. The receiving party
      shall
      only use the other party’s Confidential Information to perform its obligations
      under this Agreement and disclose the other party’s Confidential Information
      only to persons within the receiving party having a need to know the information
      for the purpose of this Agreement. The receiving party shall treat the
      Confidential Information as it does its own valuable and sensitive information
      of a similar nature, and, in any event, with not less than a reasonable degree
      of care. “Confidential Information” means any business or technical information
      of a party, including but not limited to any information relating to product
      plans, designs, costs, product prices and names, finances, marketing plans,
      business opportunities, personnel, research, development or know-how that is
      designated by the disclosing party as "confidential" or "proprietary" and,
      if
      orally disclosed, reduced to writing by the disclosing party within thirty
      (30)
      days of such disclosure.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11.4. Ownership.
      Supplier is and shall remain the owner of all Patents and Information, including
      any enhancements, modifications or enhancements to such Patents and/or
      Information which are made during the term of this Agreement by either
      party.

    

    11.5. Entire
      Agreement/Modifications.
      Except
      with respect to the Quality Assurance Agreement, this Agreement constitutes
      the
      complete and exclusive statement of the agreement between the parties, and
      supersedes all proposals, and all other prior or contemporaneous communications
      between the parties relating to the subject matter hereof, whether written
      or
      oral. No purchase order shall add additional terms to or vary the terms of
      this
      Agreement. Modifications to this Agreement shall be in writing, expressly refer
      to this Agreement, and be signed by authorized representatives of Buyer and
      Supplier.

    

    11.6.
      Severability.
      If any
      provision of this Agreement is held by a court of competent jurisdiction to
      be
      contrary to law, the remaining provisions of the Agreement shall remain in
      full
      force and effect.

    

    11.7.
      Independent
      Contractors.
      The
      parties are independent contractors to each other. No agency, employment, or
      partnership is hereby created by and between the parties. Neither party shall
      have authority to act for the other in any manner to create obligations or
      debts
      that would be binding upon the other. Neither party shall be responsible for
      any
      obligations or expenses of the other except as expressly authorized to be
      incurred in the performance of this Agreement.

    

    

    IN
      WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
      on
      the date first above written.

    

    

    

    
      	
              Laboratoires
                Carilène, SA

            	 	
              Auriga
                Laboratories, Inc..

            
	 	 	 	 	 
	 	 	 	 	 
	
              Signature

            	 	 	
              Signature
                

            	 
	 	 	 	 	 
	
              Name

            	 	 	
              Name:
                

            	
              Philip
                S. Pesin

            
	 	 	 	 	 
	
              Position

            	 	 	
              Position:
                 

            	
              Chief
                Executive Officer

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      1

    

    PACKAGING
      AND BATCH LABELING INSTRUCTIONS

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    

    Exhibit
      B

    

    Transfer
      Pricing

    

    
      	Product	
              Product
                Cost Per Unit (US Dollars)

            

    

    

    
      	“Silicium
              44” Lotion	
              $5.17

            

    

    
      	“Silicium
              44” Shampoo	
               $3.81

            

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      C

    

    Product
      Description

    

    The
      Product is a lotion and shampoo based upon combinations, in particular for
      use
      as the active principle in a cosmetic or pharmaceutical and particularly
      dermatological composition, containing peroxidised lipids and organosilicon
      compounds containing them, as well as their applications. The Product includes
      but is not limited to the combination commonly known and sold in Europe as
      “Silicium 44 Lotion” and “Silicium 44 Shampoo.” The Product is sold in Europe
      under the name M44 for France, Silicium 44 in the CEE and Middle East
      countries.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      D

    

    Patent
      & PCT FilingUnassociated Document

    

      SEPARATION
        AGREEMENT 

      

      THIS
        SEPARATION AGREEMENT (this
        “Agreement”) is entered into as of October 19, 2007 (the “Effective Date”), by
        and between H2Diesel Holdings, Inc. (the “Company”) and Michael Burstein (the
“Executive”). Capitalized terms not otherwise defined herein have the meanings
        set forth in the Employment Agreement (as defined below).

       

      WHEREAS,
        the Executive is currently the Chief Financial Officer (“CFO”) of the Company,
        and 

       

      WHEREAS,
        the
        Company and the Executive desire to establish the terms and conditions of
        Executive’s resignation as CFO on the terms and conditions contained herein and
        certain modifications to the
        Executive’s employment agreement with the Company entered into September 1, 2007
        (the “Employment Agreement”).

       

      NOW,
        THEREFORE,
        for and in consideration of the mutual promises and covenants herein contained
        and for good and valuable consideration, the sufficiency of which is hereby
        acknowledged, the Company and the Executive agree as follows:

       

      1.  Resignation
        and Waiver of Notice.
        The Executive hereby resigns from the Company and all other affiliates of
        the
        Company effective as of the Effective Date. The Company waives the 90-day
        notice
        of termination requirement set forth in Section 5(g) of the Employment
        Agreement. 

       

      2.  Executive
        Agreement.
        In exchange for the waiver as described in Section 1 of this Agreement, the
        Executive hereby agrees to the following provisions set forth in Subsections
        2.1
        through 2.3:

       

      2.1.  Compensation
        and Benefits.
        The Executive hereby unconditionally and irrevocably forfeits any and all
        rights
        applicable to the period on and after the Effective Date under Section 3
        of the
        Employment Agreement, including with regard to Base Salary, Equity Compensation,
        Benefits, Vacation, Business Expenses, Bonus Plan, or Relocation Expenses.
        

       

      2.2.  Options.
        The Executive hereby unconditionally and irrevocably forfeits any and all
        rights
        to all stock options (including without limitation vested options and any
        rights
        to future grants of options) granted pursuant to Section 3.2 of the Employment
        Agreement. 

       

      2.3.  Accrued
        Amounts.
        The Executive hereby unconditionally and irrevocably forfeits any and all
        rights
        to all “Accrued Amounts” as defined in Section 5(a) of the Employment
        Agreement.

       

      3.  General
        Waiver and Release. The
        Executive agrees to execute a General Waiver and Release Agreement on the
        Effective Date in exactly the form provided to the Executive by the Company
        without alteration or addition (the “General
        Waiver and Release Agreement”),
        attached hereto as Exhibit
        A,
        the
        terms and conditions of which are specifically incorporated herein by reference.
        

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4.  Nondisparagement.
        The parties agree that any public announcement regarding the Executive’s
        separation shall be in the form of or not inconsistent with statements approved
        in writing by an executive officer of the Company.

       

      4.1.  Executive
        Covenant.
        The
        Executive understands and agrees that as a condition for the waiver in Section
        1, he will not make any false, disparaging or derogatory statements to any
        media
        outlet, industry group, financial institution or current or former employee,
        consultant, client or customer of the Company (or any affiliate of the Company),
        or to any other entity or person, regarding the Company or any of its
        affiliates, officers, directors, agents, consultants, employees, customers
        or
        suppliers or about the Company’s (or its affiliate’s) business affairs or
        financial condition; provided, however, that the prohibition in this Section
        3.1
        shall not apply to truthful communications the Executive is required by law
        to
        make to the Board of Directors of the Company or any governmental
        entity.

       

      4.2.  Company
        Covenant.
        The
        Company agrees that no Company officer or director (each a “Managing Person”)
        shall make, or shall direct or authorize any employee, former employee or
        agent
        to make, any false, disparaging or derogatory statements to any media outlet,
        industry group, financial institution, current or former employee (excluding
        Managing Persons), consultant, client or customer of the Company (or any
        affiliate of the Company), or to any other entity or person, regarding the
        Executive; provided, however, that the prohibition in this Section 3.2 shall
        not
        apply to truthful communications the Company or a Managing Person is required
        by
        law to make, or authorize or direct to be made, to any governmental
        entity.

       

      5.  Miscellaneous.

       

      4.1. Notices.
        All
        notices or requests under this Agreement shall be in writing and addressed
        as
        follows:

       

      

       

      
        	
                If
                  to the Company:

                 

                H2Diesel
                  Holdings, Inc.

                11111
                  Katy Freeway, Suite 910

                
                  Houston,
                    Texas 77079

                

                Attention:
                  David A. Gillespie

              	
                with
                  copy to:

                 

                Hogan
                  & Hartson LLP

                555
                  Thirteenth Street, NW 

                Washington,
                  DC 20004

                Attention:
                  Steven Kaufman, Esq.

              
	
                If
                  to the Executive:

                 

                Michael
                  Burstein

                6740
                  Willow Lane

                Dallas,
                  Texas 75230

              	
                with
                  copy to:

                 

                 

              

      

       

      or
        to such other address as may be designated by either party in a notice to
        the
        other. Each notice, demand, request or other communication that shall be
        given
        or made in the manner described above shall be deemed sufficiently given
        or made
        for all purposes three days after it is deposited in the U.S. mail, postage
        prepaid, or at such time as it is delivered to the addressee (with the return
        receipt, the delivery receipt, the answer back or the affidavit of messenger
        being deemed conclusive evidence of such delivery) or at such time as delivery
        is refused by the addressee upon presentation.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      4.2. Representations.
        The Executive agrees to execute any proper oath or verify any proper document
        required to carry out the terms of this Agreement and the General Waiver
        and
        Release Agreement. The Executive represents that performance of all the terms
        of
        this Agreement will not breach any similar agreement. Executive has not entered
        into, and Executive agrees not to enter into, any oral or written agreement
        in
        conflict herewith.

       

      4.3. Severability.
        The invalidity or unenforceability of any one or more provisions of this
        Agreement shall not affect the validity or enforceability of the other
        provisions of this Agreement, which shall remain in full force and
        effect.

       

      4.4. Binding
        Effect.
        This Agreement shall be binding upon the parties hereto and shall inure to
        the
        benefit of the Executive and Company (including, the Company’s successors and
        assigns). The rights and obligations of the Executive under this Agreement
        shall
        not be assignable or delegable by the Executive, except that in the event
        of the
        Executive’s death, the Executive’s estate shall have the right to receive any
        amount owing and unpaid to the Executive hereunder. 

       

      4.5. Amendment;
        Waiver.
        This Agreement shall not be amended, altered or modified except by an instrument
        in writing duly executed by the parties hereto. Neither the waiver by either
        of
        the parties hereto of a breach of or a default under any of the provisions
        of
        this Agreement, nor the failure of either of the parties, on one or more
        occasions, to enforce any of the provisions of this Agreement or to exercise
        any
        right or privilege hereunder, shall thereafter be construed as a waiver of
        any
        subsequent breach or default of a similar nature, or as a waiver of any such
        provisions, rights or privileges hereunder.

       

      4.6. Headings.
        Section and subsection headings contained in this Agreement are inserted
        for
        convenience of reference only, shall not be deemed to be a part of this
        Agreement for any purpose, and shall not in any way define or affect the
        meaning, construction or scope of any of the provisions hereof.

       

      4.7. Governing
        Law. 
        This Agreement, the rights and obligations of the parties hereto, and any
        claims
        or disputes relating thereto, shall be governed by and construed in accordance
        with the laws of the State of Florida (but not including the choice of law
        rules
        thereof).

       

      4.8. Entire
        Agreement.
        This Agreement and the General Waiver and Release Agreement constitute the
        entire agreement between the parties respecting the Employment Agreement,
        there
        being no representations, warranties or commitments except as set forth
        herein.

       

      4.9. Counterparts.
        This Agreement may be executed in two or more counterparts, each of which
        shall
        be an original and all of which shall be deemed to constitute one and the
        same
        instrument.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      4.10. No
        Right to Continued Employment. Nothing
        in this Agreement shall be deemed to give the Executive the right to be retained
        in the employ of the Company, or to interfere with the right of the Company
        to
        discharge the Executive at any time and for any reason.

       

      4.11. Fees
        and Costs.
        In any action relating to or arising from this Agreement, or involving its
        application, the party substantially prevailing shall recover from the other
        party the expenses incurred by the prevailing party in connection with the
        action, including court costs and reasonable attorneys’ fees.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      IN
        WITNESS WHEREOF,
        and intending to be legally bound, the parties have duly executed this Agreement
        as of the day and year first herein above written.

       

      
        	 	 	 H2DIESEL
                HOLDINGS, INC
	 	  	 
	 	 	/s/ David A. Gillespie
	 	
                
By:   
David
                A. Gillespie 
	 	Title:
                President and Chief Executive Officer

      
        	 	 	 EXECUTIVE:
	 	 	 
	 	 	 
	 	 	/s/ Michael Burstein
	 	
                
Michael
                Burstein
	 	 

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      EXHIBIT
        A

      GENERAL
        WAIVER AND RELEASE AGREEMENT

      

      THIS
        GENERAL WAIVER AND RELEASE AGREEMENT is entered into as of October 19, 2007
        (the
“Effective Date”), by Michael Burstein (the “Executive”) in consideration of the
        waiver to be provided to the Executive by H2Diesel Holdings, Inc. (the
“Company”) pursuant to the Separation Agreement by and between the Company and
        the Executive, dated as of October 19, 2007 (the “Agreement”).

       

      1.  Waiver
        and Release. 

       

      1.1  By
        the Executive.
        The
        Executive, on his own behalf and on behalf of his heirs, executors,
        administrators, attorneys and assigns, hereby unconditionally and irrevocably
        releases, waives and forever discharges (a)
        the Company and each of its affiliates, parents and subsidiaries, (b) the
        successors and predecessors of the Company and each of its affiliates, parents
        and subsidiaries, and (c) the directors, owners, members, shareholders,
        officers, agents, and employees of the Company and each of its affiliates,
        parents, subsidiaries, successors and predecessors (collectively, all of
        the
        foregoing described in (a), (b) and (c) are referred to as the
“Employer”)
        from any
        and all causes of action, claims and damages, including attorneys’ fees, whether
        known or unknown, foreseen or unforeseen, presently asserted or otherwise
        arising through the date of his signing of this Agreement, concerning his
        employment or separation from employment, except for claims arising under
        this
        Agreement. This release includes, but is not limited to, any claim or
        entitlement to salary, bonuses, any other payments, benefits or damages arising
        under any federal law (including, but not limited to, Title VII of the Civil
        Rights Act of 1964, the Age Discrimination in Employment Act, the Employee
        Retirement Income Security Act of 1974, the Americans with Disabilities Act,
        Executive Order 11246, the Family and Medical Leave Act, and the Worker
        Adjustment and Retraining Notification Act, each as amended); any claim arising
        under any state or local laws, ordinances or regulations (including, but
        not
        limited to, workers’ compensation retaliation) or any state or local laws,
        ordinances or regulations requiring that advance notice be given of certain
        workforce reductions); and any claim arising under any common law principle
        or
        public policy, including, but not limited to, all suits in tort or contract,
        such as wrongful termination, defamation, emotional distress, invasion of
        privacy or loss of consortium.

       

      2.1  By
        the Employer.
        The
        Employer hereby unconditionally and irrevocably releases, waives and forever
        discharges the Executive from any and all causes of action, claims and damages,
        including attorneys’ fees, whether known or unknown, foreseen or unforeseen,
        presently asserted or otherwise arising through the date of his signing of
        this
        Agreement, concerning his employment or separation from employment, except
        for
        claims arising under this Agreement. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      2.  Acknowledgements.
        In
        accordance with the Older Workers Benefit Protection Act of 1990, the Executive
        represents and acknowledges that:

       

      (a)  This
        Agreement is written in a manner he understands;

       

      (b)  By
        execution of this Agreement, he does not waive rights or claims under the
        ADEA
        that arise after the date of its execution;

       

      (c)  He
        has had the opportunity to consult an attorney prior to the execution of
        this
        Agreement;

       

      (d)  He
        waives all rights under the ADEA in return for the consideration provided
        for in
        this Agreement, which is in excess of anything of value to which he is already
        entitled;

       

      (e)  He
        has been given a reasonable time to consider whether to sign this Agreement;
        and

       

      (f)  He
        understands that with respect to the waiver of claims under the ADEA only,
        he
        has seven (7) days after signing this Agreement to revoke this waiver, after
        which time the waiver becomes binding and enforceable. The Executive further
        agrees and understands that if he chooses to exercise his right of revocation
        under this Section, he must notify
        the
        Company
        of his intent to do so in a signed writing delivered to the Company before
        the
        end of this seven (7) day period.

       

      3.  Entire
        Agreement.
        There
        are no other agreements of any nature between the Executive and the Company
        with
        respect to the matters discussed in this General Waiver and Release Agreement,
        and that in signing this General Waiver and Release Agreement, he is not
        relying
        on any agreements or representations, except those expressly contained in
        this
        General Waiver and Release Agreement.

       

      4.  Execution.
        It is
        not necessary that the Company sign this General Waiver and Release Agreement
        following the Executive's full and complete execution of it for it to become
        fully effective and enforceable.

       

      5.  Severability.
        If any
        provision of this General Waiver and Release Agreement is found, held or
        deemed
        by a court of competent jurisdiction to be void, unlawful or unenforceable
        under
        any applicable statute or controlling law, the remainder of this General
        Waiver
        and Release Agreement shall continue in full force and effect.

       

      6.  Governing
        Law.
        This
        General Waiver and Release Agreement shall be governed by the laws of the
        State
        of Florida, except for the provisions of Florida law that would refer
        jurisdiction to another state.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      7.  Headings.
        Section
        and subsection headings contained in this General Waiver and Release Agreement
        are inserted for the convenience of reference only. Section and subsection
        headings shall not be deemed to be a part of this General Waiver and Release
        Agreement for any purpose, and they shall not in any way define or affect
        the
        meaning, construction or scope of any of the provisions hereof.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      IN
        WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the
        day
        and year first herein above written.

       

       

      
        

          
            	 	 	 EXECUTIVE:
	 	 	 
	 	 	 
	 	 	/s/ Michael Burstein
	 	
                    
Michael
                    Burstein
	 	 

          

           

        

        
          	 	 	 H2DIESEL
                  HOLDINGS, INC
	 	  	 
	 	 	/s/ David A. Gillespie
	 	
                  
By:   
David
                  A. Gillespie 
	 	Title:
                  President and Chief Executive Officer

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