EXCLUSIVITY, MANUFACTURING AND SUPPLY AGREEMENT

Exhibit 10.2

EXCLUSIVITY, MANUFACTURING AND SUPPLY AGREEMENT

THIS EXCLUSIVITY, MANUFACTURING AND SUPPLY AGREEMENT (hereinafter referred to as " Agreement ") is made and entered into as of August 23, 2007 (the " Effective Date ") is made by and between Dermworx Incorporated, a Delaware corporation, with its offices at 934 S. Southlake Drive, Hollywood, Florida 33019 (hereinafter referred to as " Dermworx ", which reference may include its Affiliates), and IGI, Inc., a Delaware corporation, with its offices at 105 Lincoln Avenue, Buena, New Jersey 08310 (hereinafter referred to as " IGI ", which reference may include its Affiliates). Dermworx and IGI are sometimes referred to herein individually as a " Party " or collectively as " Parties ".

THIS Agreement, upon execution, will supersede and replace the earlier agreement, dated October 11, 2006, in between Dermworx and IGI.

RECITALS

WHEREAS, Dermworx has been formed to develop, market and sell dermatological pharmaceuticals and cosmeceuticals ("Dermatological Drugs");

WHEREAS, IGI owns or has rights to certain intellectual property trade marked as Novasome® and has know-how to develop and manufacture formulations using such technology (hereinafter referred to as "Technology ");

WHEREAS, IGI has developed one 2% Salicylic Acid lotion Product (Product code # RL1109B) utilizing the Technology (hereinafter referred as the " Product "), determined by Dermworx to be suitable for the treatment of acne;

WHEREAS, Dermworx desires an exclusive license to market and sell the Product in North, South and Central America, and in the United Kingdom;

WHEREAS, IGI possesses the facilities, equipment, technologies, intellectual property rights (either through direct ownership or license), and has the technical know-how and capacity to produce such Product for Dermworx;

WHEREAS, as a condition to maintain the exclusive rights Dermworx desires, IGI is to be exclusive manufacturer of the finished packaged Product for its purchase according to the provisions of this Agreement;

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WHERAS, Dermworx and IGI desire to set forth and define their relationship on the subject matter contained herein, including but not limited to consideration, Funding, and their respective rights, benefits, duties and liabilities.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.        DEFINITIONS .

1.10   " Affiliates " means any Person or entity controlling, controlled by or under common control with that Person or entity. "Control" for this purpose means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person or entity, whether through the ownership of voting securities or interests, by contract, or otherwise.

1.11   " Business Day " shall mean any day which is neither a Saturday, a Sunday nor a legal holiday on which banks are authorized or required to be closed in the state of New Jersey.

1.12   " Certificate of Analysis " means a summary of the quality control testing, as described in the Product Specifications, performed by IGI for the Finished Product supplied under this agreement.

1.13   " cGMP " means the then-current good manufacturing practices established by the U.S. Food and Drug Administration, as may be amended from time to time.

1.14  " Contract Year " means, (i) with respect to the first Contract Year, the period commencing on the Effective Date and ending on the last day of the month in which the first anniversary of the Effective Date falls, and (ii) with respect to any subsequent Contract Year, the one year period commencing upon the first day of the month following the month in which an anniversary of the Effective Date falls.

1.15   " Facility " shall mean any IGI manufacturing facility used for the Production of the Products.

1.16   " FDA Act " shall mean the federal Food, Drug and Cosmetic Act, as amended.

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1.17   " Field " means any Product recognized in the trade as a pharmaceutical, cosmetic or personal care Product.

1.18    "First Commercial Sale " shall mean the first sale by Dermworx of a Product for Trade.

1.19   " Finished Product " shall mean the Product together with all Labeling, branding, trade dress and packaging set forth in the Product Specifications.

1.20   " Formulations " shall mean the Products as further described and set forth on Exhibit A .

1.21   " Improvements " shall mean enhancements to the formulation and manufacturing process.

1.22    "Launch" shall mean the date of the first commercial shipment of the Product by Dermworx or its affiliates to a third party customer in the Territory.

1.23   " Novasome® Technology " shall mean certain proprietary technology involving the use of amphiphiles to prepare bi-layer membrane structures.

1.24   " Person " means an individual, a partnership, a corporation, an association, a joint stock company. a trust, a joint venture, an unincorporated organization, or a governmental entity (or department, agency or political subdivision thereof).

1.25   " Product Sale Period " means the one year period starting from the earlier of November 30, 2007 or the shipment of the Product to Dermworx designated warehouse from IGI manufacturing facility in Buena, NJ.

1.26   " Specification " shall mean the specification for the Product set forth on Exhibit B .

1.27   " Territory " means the North America, South America, Central America and the United Kingdom.

1.28   " Third Party " means any person or legal entity other than IGI, Dermworx or their Affiliates.

1.29   " Trade Secrets " shall mean all categories of trade secrets as defined in the Uniform Trade Secrets Act including inventions, clinical information, manufacturing and Production

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processes, experience, procedures and techniques, methods, practices, know-how, formulae, research and development information, business information, supplier and customer lists and related information, and all other confidential and proprietary information and rights.

2.        PRODUCT REQUIREMENTS .

2.1      Exclusive Supply of the Product . For the period commencing on the Effective Date IGI shall supply, or cause to be supplied, and Dermworx shall purchase all of Dermworx's requirements of the Finished Product, for use in the Field in the Territory on the terms, and subject to the conditions, of this agreement. IGI agrees that, during the Term of this Agreement, Dermworx shall have the exclusive right to purchase the Product from IGI and its Affiliates for resale in the Field and the Territory until such time as Dermworx fails to satisfy the guaranteed minimum royalties requirements specified in Section 5.1.1 below and forfeits its exclusive right to purchase the Product in accordance with Section 5.1.2 below.

2.2      General Responsibilities . IGI will be responsible at its expense for all scale-up, validation, stability, Finished Product testing and stability, and fill and finish work related to the manufacture of the Product.

2.3      Product Specifications . The specifications for the Product are set forth in Exhibit B attached hereto, which may be changed from time to time upon written agreement of the parties (the " Specifications ").

3.        ESTIMATES, ORDERS AND TERMS OF SALE .

3.1      Product Estimates . At least sixty (60) days prior to the start of each calendar quarter, Dermworx shall provide IGI with a written estimate of the amounts of the Product that it will require during such quarter and for each of the three (3) calendar quarters subsequent thereto. The parties agree that the Product estimates produced pursuant to this Section 3.1 are for convenience purposes only, and that such Product estimates shall not obligate Dermworx to purchase any specific amount of Products.

3.2      Purchase Orders . Dermworx shall provide IGI with binding purchase orders for the purchase of the Product, which will specify, at a minimum, item ordered, volume ordered, price, and requested delivery date (" Purchase Orders "). Purchase Orders must be delivered to IGI at least forty-five (45) Business Days prior to the shipment date requested in such Purchase Order. IGI may reject any Purchase Order that does not conform to the requirements of this paragraph of the Agreement. In addition, in the event Customer submits Purchase Orders for Product in excess of one-hundred fifty percent (150%) of the forecasts provided pursuant to Section 3.1, IGI may delay the shipment date for the excess by such reasonable period as is necessary for Dermworx to manufacture such excess.

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3.3      Terms of Sale . Notwithstanding any different terms which may be contained in any Purchase Order or other form(s) submitted by Dermworx to IGI, all sales of Products by IGI to Dermworx shall be controlled by and subject to the terms and conditions of sale set forth on Exhibit C hereto, which are hereby incorporated into and made a part of this Agreement. Any acceptance by IGI of any Purchase Order shall be deemed to restate all of the terms and conditions set forth in this Agreement and Exhibit C applicable to such sale and no modification or amendment to such terms of sale shall be effective unless in writing executed by an officer of IGI and an officer of Dermworx explicitly stating that it is the intention of the parties to modify such terms and conditions of sale.

3.4      Launch of the Product . The launch by Dermworx of the Product shall occur no later than January 31, 2008.

3.5     Inability to Supply .

(a) Subject to Article 9, if IGI is unable or shall otherwise fail to supply all of Dermworx's Purchase Orders for the Product as contemplated hereby, including but not limited to by reason of Section 8.3, IGI shall use reasonably diligent efforts to provide for supply of the Product from Third Parties capable of supplying such items who reasonably demonstrate that they can supply Dermworx's orders of the Product according to the terms of this Agreement for a continuous period of ninety (90) days. In the event IGI causes Third Parties to supply Products in accordance with this Section 3.5 (a), IGI shall cause such items to be supplied to Dermworx at a price not to exceed the price for the Product as set forth in Exhibit A .

(b) In the event IGI is unable to cause a Third Party to manufacture Product to meet its obligations to Dermworx under the terms of Section 3.5 (a) of this Agreement, IGI shall facilitate and reasonably cooperate with procedures for disclosure of IGI's technical information and know-how concerning the manufacture of the Product, and taking into account the highly confidential nature of the IGI Confidential Information, to enable a Third Party mutually agreeable to the Parties who will act as a Third Party Contract Manufacturer for IGI, and Dermworx will have the right to purchase through IGI such Product manufactured by the Third Party Contract Manufacturer.

(c) In the event that either sub-paragraph (a) or (b) of this sub-paragraph 3.5 becomes effective, then the Third Party contractor and Dermworx shall be granted a limited, non-assignable, royalty free license from IGI for its intellectual property covering the Product and manufacturing thereof. This limited license shall be self executing when a Third Party contractor is engaged, and shall have a term of months for the period of time that it is necessary for the Third Party contractor to manufacture and package the Product. This limited license shall terminate upon IGI resuming manufacturing of the Product.

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4.        PRICE AND PAYMENT .

4.1      Development Fee . Dermworx shall pay IGI Two Hundred and Fifty Thousand Dollars ($250,000) for the development of the Product. For the purpose of clarity, the $250,000 payment by Dermworx to IGI on November 30, 2006 against the Agreement of October 11, 2006 shall be applied and credited in full to this new Agreement and Dermworx will not owe IGI for the Product development as stated above.

4.2      Price for the Product . The price for the Product shall be the sales price (from IGI to Dermworx) for such Product as set forth in Exhibit A hereto as adjusted as set forth in this Section 4 (the " Price "). The Prices for Products shall be fixed during the first twelve (12) months of the Term (the " Fixed Period ") defined in 8.1 hereunder, and such Prices shall be subject to adjustment pursuant to Section 4.2 after the Fixed Period.

4.3      Price Adjustments . Notwithstanding anything to the contrary in Section 4.2 above, after the Fixed Period, Prices shall be adjusted automatically annually to reflect an average increase in the Producer Price Index for Finished Goods Excluding Foods (PPIFLF) or a successor index as published by the United States Department of Labor (or such other governmental authority as may be charged with compiling such index from time to time) for the preceding twelve (12) month period.

4.4      Payment . Terms of payment by Dermworx to IGI shall be fifty percent (50%) cash down payment with Dermworx purchase order, balance due within thirty (30) days of receipt of the Product covered by the invoice for that Product when delivered. The amount due under all such Purchase Orders which have not been timely paid and no good faith dispute exists as to such Purchase Order, shall incur interest of 18% per annum. Other than Product for which Dermworx and IGI have a good faith dispute over the payment thereof, if Dermworx does not comply fully with the foregoing payment terms on Product for which there is no dispute after having been given a opportunity to cure the same pursuant to Section 7.2, then IGI, at its option, may defer additional shipments until overdue accounts have been paid, suspend Production of the Product, and/or pursue collection actions and other available remedies. In the event that Dermworx in good faith disputes any amount due under an invoice, Dermworx shall pay the undisputed amount due and may withhold payment only of the disputed portion of the invoice. The parties shall discuss the disputed amount in good faith and seek to resolve such dispute.

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5.        ROYALTY PAYMENTS .

5.1     Upon Dermworx effecting sales of the Product, IGI shall be paid a [***] royalty on Net Sales ("Royalty") as in 5.2 hereunder.

5.1.1  In consideration of the exclusivity granted to Dermworx hereunder, Dermworx and permitted Affiliates of Dermworx shall guarantee IGI a minimum royalty payment of [***]

5.1.2  The exclusivity of the Product granted to Dermworx will become non exclusive if the conditions specified in 5.1.1 above are not met. However, in the event that Dermworx does not generate enough sales to pay above specified royalty amount to IGI, Dermworx can maintain exclusivity of the Product in the Territory by paying to IGI an amount equal to the difference in royalty paid and minimum guaranteed royalty specified in 5.1.1 above. Such difference shall however be paid within 30 days of the last day of the Product sale period of any given year.

5.2      Net Sales . "Net Sales" shall mean the total gross sales (number of units shipped times the invoiced price per unit) to third parties representing sales invoiced by Dermworx and its Affiliates and their sub licensees (including sub licensees of any sub licensee) of the Product less deductions for the following to the extent actually paid or allowed:

5.2.1  sales and excise taxes and duties (including import duties) paid or allowed by a selling party and any other governmental charges imposed upon the sale of an Initial Dermworx Product or Potential Product;

5.2.2  normal and customary trade, quantity and cash discounts (up to the amount normal and customary in a given country for early payment of invoices) and rebates, chargeback and administrative fees (including rebates to social and welfare systems);

5.2.3  allowances, chargeback and credits to third parties on account of rejected, damaged, outdated, returned, withdrawn or recalled Initial Dermworx Products Potential Products or on account of retroactive price reductions affecting the Initial Dermworx Products or Potential Products;

5.2.4  The calculation of Net Sales shall be made in accordance with generally accepted accounting principles applicable to the locality where the invoices are prepared and consistently applied.

5.2.5  Sales between Dermworx and its Affiliates and/or their sub licensees shall be excluded from the computation of Net Sales, but Net Sales shall include the first sales to third parties by any such Affiliates and their sub licensees. The supply of the Product, as commercial samples or for use in clinical studies shall not be included within the computation of Net Sales provided such items are provided without consideration. Where (i) the Product is sold by Dermworx or an Affiliate or their sub licensees as one of a number of items without a separate price; or (ii) the consideration for the Product shall include any non-cash element; or (iii) the Product (other than commercial samples for which no payment is made by the receiving party) shall be transferred by Dermworx or an Affiliate or their sub licensees in any manner other than an invoiced sale, the Net Sales applicable to any such transaction shall be deemed to be Dermworx's average Net Sales price for the applicable quantity of such Product at that time.

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***Confidential treatment requested pursuant to a request for confidential treatment filed with the Securities and Exchange Commission. Omitted portions have been separately filed with the Commission.

5.3      Royalty Reports, Accounting and Exchange Rates . During the term of this Agreement following the Launch of the Product in any country, Dermworx shall furnish to IGI a written report by calendar quarter showing in reasonably specific detail, on a country-by-country basis, (a) the total number of units of the Product sold; (b) the Net Sales on the Product, (c) the calculation of the royalties payable pursuant to section 5.1 in United States dollars which shall have accrued hereunder based upon Net Sales of each of the Product, including a detailed calculation showing the application of the applicable royalty rates under section 5.1 to the aggregate Net Sales for the Product; (d) the withholding taxes, if any, required by law to be deducted with respect to such royalties and the amount paid to the appropriate governmental authority with respect to such royalties; (e) the date of Launch of each of the Product in each country in the country during the reporting period; and (f) the exchange rates used in determining the amount of United States dollars. With respect to sales of the Product invoiced in United States dollars, the Net Sales and royalties and other payments payable hereunder shall be expressed in United States dollars. With respect to sales of the Product invoiced in a currency other than United States dollars, the Net Sales and royalties and other payments payable hereunder with respect to such Product shall be expressed in the domestic currency of the Party making the sale together with the United States dollar equivalent of the royalty payable, and such exchange shall be calculated pursuant to Section 5.6 of this Article. Reports shall be due on the thirtieth (30th) day following the close of each calendar quarter.

5.4      IGI Audit Rights .

5.4.1  Dermworx shall maintain, and Dermworx shall require its Affiliates and each of their sub licensees to maintain, at their respective offices accurate and complete books and records of the Net Sales of the Product consistent with sound business and accounting practices and in such form and in such detail as to enable Dermworx, its Affiliates and sub licensees to verify the royalties payable to IGI pursuant to section 5.1. Upon the written request of IGI, but not more than once in each calendar year, Dermworx, its Affiliates and sub licensees shall permit IGI or an independent certified public accounting firm selected by IGI or such third party and reasonably acceptable to Dermworx, at IGI's expense, on reasonable notice of not less than ten (10) days to have access during normal business hours to such of the records of Dermworx, its Affiliates and sub licensees as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any year ending not more than twenty four (24) months prior to the date of such request. The IGI designated certified public accounting firm shall execute such confidentiality agreements with respect to such access as Dermworx, its Affiliates and sub licensees shall reasonably request.

5.4.2  If such accounting firm concludes that additional royalties were owed or that royalties were overpaid during such period, Dermworx shall pay the additional royalties or IGI shall credit or pay Dermworx the overage, in each case with interest computed at the London Interbank Offering Rate of interest plus two percent (2%), as reported by The Wall Street Journal for the applicable payment date, or if not so published on such date, as published in The Wall Street Journal for the next business day, within thirty (30) days of the date IGI or the Third Party delivers to Dermworx such accounting firm's written report so concluding. The fees charged by such accounting firm shall be paid by IGI, provided, however, that if the audit discloses that the royalties payable by Dermworx for the audited period are more than one hundred five percent (105%) of the royalties actually paid for such period, then Dermworx shall pay the reasonable fees and expenses charged by such accounting firm.

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5.5      Confidential Financial Information . Each party shall treat all financial information subject to review under this Article 5 as confidential, and shall cause its accounting firm to retain all such financial information in confidence.

5.6      Payment; Exchange Rates . All payments payable pursuant to this Agreement shall be made in United States dollars and all royalty payments shall be paid on a country-by-country and Product-by-Product basis not later than thirty (30) days from the end of each calendar quarter for Net Sales of each Initial Dermworx Products and Potential Products in the country. With respect to payments to be made which are based in a currency other than United States dollars, conversion from such currency to United States dollars shall be determined based on the average of the U.S. dollar equivalent exchange rate as published in The Wall Street Journal for the first and last business day for such calendar quarter.

5.7      Best Efforts . Dermworx shall use its Best Efforts to market and effectuate sales of the Product for the objectives of maximizing revenues for Dermworx and Royalties for IGI.

6.        WARRANTIES .

6.1      Product and Personnel Warranties . IGI warrants that the Product sold by IGI hereunder shall (i) be free from defects in material and workmanship, (ii) be manufactured in accordance with cGMP, (iii) not be, at the time of such delivery, adulterated or misbranded within the meaning of the FDA Act, or within the meaning of any applicable state or municipal law in which the definition of adulteration or misbranding is substantially the same as contained in the FDA Act, as such laws are constituted and effective at the time of delivery; provided that IGI shall bear no responsibility and have no liability for any breach of this warranty arising from Dermworx's breach of the warranty set forth in Section 5.7, 5.9, 5.10 and 6.3 below, (iv) conform in all material respects to the Specifications, as may be amended from time to time as provided by Section 2.2 herein below. IG