AURIGA LABORATORIES, INC.
STOCK PURCHASE AGREEMENT
 
September 13, 2007
 

 
 

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TABLE OF CONTENTS
 

     
Page
 
1.
 
AGREEMENT TO SELL AND PURCHASE
 
1
 
1.1    Authorization of Shares.
1
 
1.2    Sale and Purchase.
1
 
2.
 
CLOSING, DELIVERY AND PAYMENT
 
2
 
2.1    Closing.
2
 
2.2    Delivery.
2
 
3.
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
2
 
3.1    Organization, Good Standing and Qualification.
2
 
3.2    Capitalization; Voting Rights.
2
 
3.3    Authorization; Binding Obligations.
3
 
3.4    Liabilities.
3
 
3.5    Agreements; Action.
3
 
3.6    Obligations to Related Parties.
3
 
3.7    Changes.
3
 
3.8    Title to Properties and Assets; Liens, etc.
5
 
3.9    Patents and Trademarks.
5
 
3.10  Litigation.
5
 
3.11  Taxes.
6
 
3.12  Employees.
6
 
3.13  Compliance with Laws; Permits.
6
 
3.14  Offering Valid.
6
 
3.15  Full Disclosure.
7
 
4.
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
7
 
4.1    Requisite Power and Authority.
7
 
4.2    Investment Representations.
7
 
5.
 
CONDITIONS TO CLOSING9
 
5.1    Conditions to Purchaser’s Obligations at the Closing.
9
 
5.2    Conditions to Obligations of the Company.
9
 
6.
 
OTHER AGREEMENTS
 
10
 
6.1    Indemnification.
10
 
6.2    Registration of the Shares.
10
 
7.
 
MISCELLANEOUS
 
11
 
7.1    Governing Law.
11
 
7.2    Survival.
11
 
7.3    Successors and Assigns.
12
 
7.4    Entire Agreement.
12
 
7.5    Severability.
12
 
7.6    Amendment; Waiver.
12
 
7.7    Delays or Omissions.
12
     

 
 
 
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7.8    Notices.
13
 
7.9    Expenses.
14
 
7.10  Attorneys’ Fees.
14
 
7.11  Titles and Subtitles.
14
 
7.12  Counterparts.
14
 
7.13  Broker’s Fees.
14
 
7.14  Confidentiality.
14
 
7.15  Pronouns.
15
 
7.16  California Corporate Securities Law.
15

 
 
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STOCK PURCHASE AGREEMENT
 
THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into as of September
13, 2007, by and among Auriga Laboratories, Inc., a Delaware corporation (the
“Company”) and the persons and/or entities whose names are set forth on the
signature page hereto (collectively referred to hereinafter as “Purchaser”).
 
Recitals
 
WHEREAS, the Company wishes to sell and issue an aggregate of up to 6,000,000
shares of its common stock, par value $0.001 per share (the “Common Shares”);
 
WHEREAS, as additional consideration for the purchase of the Common Shares, the
Company shall issue to Purchaser a warrant to purchase an additional number of
shares of its common stock, par value $0.001 per share, equal to twenty percent
(20%) of the aggregate number of Common Shares purchased by Purchaser hereunder
(the “Warrant Shares” and, together with the Common Shares, the “Shares”);
 
WHEREAS, Purchaser desires to purchase the Shares on the terms and conditions
set forth herein; and
 
WHEREAS, the Company desires to issue and sell the Shares to Purchaser on the
terms and conditions set forth herein.
 
Agreement
 
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
 
1.
AGREEMENT TO SELL AND PURCHASE

 

 
1.1
Authorization of Shares.

 
On or prior to the Closing (as defined in Section 2.1 hereof), the Company shall
have authorized: (a) the sale and issuance to Purchaser of the Common Shares;
and (b) the issuance of such shares of common stock, par value $0.001 per share,
to be issued upon conversion of the Warrant Shares (the “Conversion Shares”).
 

 
1.2
Sale and Purchase.

 
Subject to the terms and conditions hereof, at the Closing the Company hereby
agrees to issue and sell to Purchaser and Purchaser agrees to purchase from the
Company the number of Shares set forth opposite Purchaser’s name on the
signature page hereto, at a purchase price calculated by the 20 day trailing
moving average prior to and including September 10, 2007 of the Company’s
closing stock price with a 20% discount, which is equal to Fifty Three Cents
($0.53) per share. Purchaser shall pay the aggregate purchase price equal to the
number of Shares set forth opposite Purchaser’s name on the signature page
hereto multiplied by the price per share set forth in the preceding sentence
(the “Purchase Price”), in cash by wire transfer or check made payable to the
order of the Company. As additional consideration for the purchase of the Common
Shares, the Company shall issue to Purchaser a warrant to purchase a number of
Warrant Shares equal to twenty percent (20%) of the aggregate number of Common
Shares purchased by Purchaser hereunder, which Warrant Shares shall be
exercisable in accordance with the terms of Section 2.2 hereof.
 

 
 

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2.
CLOSING, DELIVERY AND PAYMENT

 

 
2.1
Closing.

 
The closing of the sale and purchase of the Shares under this Agreement (the
“Closing”) shall take place at 10:00 p.m. on the date set forth above or at such
time as the parties shall agree at the offices of the Company, 10635 Santa
Monica Blvd. #120, Los Angeles, California, or at such other time or place as
the Company and Purchaser may mutually agree (the “Closing Date”).
 

 
2.2
Delivery.

 
At the Closing, subject to the terms and conditions hereof, the Company will
deliver to Purchaser, against payment of the Purchase Price: (a) a certificate
representing the number of Shares to be purchased at the Closing by Purchaser
(or evidence of the transfer of the Shares to Purchaser’s account via DWAC
electronic delivery); and (b) a duly-executed warrant to purchase such number of
Warrant Shares as set forth opposite Purchaser’s name on the signature page
hereto, which warrant shall be substantially in the form attached hereto as
Exhibit A (the “Warrant”).
 
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 
Except as set forth in the Company’s Annual Report on Form 10-KSB for the year
ended December 31, 2006, filed with the Securities and Exchange Commission
(“SEC”) on March 30, 2007 (“2006 Form 10-KSB”), or the Company’s Quarterly
Report on Form 10-QSB for the quarter eneded June 30, 2007, filed with the SEC
on August 8, 2007 (“2007 Form 10-QSB”), the Company hereby represents and
warrants to Purchaser as of the date of this Agreement as follows:
 

 
3.1
Organization, Good Standing and Qualification.

 
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. The Company has all requisite
corporate power and authority to own and operate its properties and assets, to
execute and deliver this Agreement, to operate in accordance with the
Certificate of Incorporation and the Bylaws of the Company, to issue and sell
the Shares and the Conversion Shares, to carry out the provisions of this
Agreement, and to carry on its business as presently conducted and as presently
proposed to be conducted.
 

 
3.2
Capitalization; Voting Rights.

 
The authorized capital stock of the Company, immediately prior to the Closing,
consists of 250,000,000 shares of common stock, par value $0.001 per share,
44,243,000 shares of which are issued and outstanding, and 10,000,000 shares of
preferred stock, par value $0.001 per share, of which none are outstanding. All
issued and outstanding shares of the Company’s common stock: (a) have been duly
authorized and validly issued; and (b) are fully paid and nonassessable. The
Conversion Shares have been duly and validly reserved for issuance. When issued
in compliance with the provisions of this Agreement, the Shares and the
Conversion Shares will be validly issued, fully-paid and nonassessable, and will
be free of any liens or encumbrances; provided, however, that the Shares and the
Conversion Shares shall be subject to such restrictions on transfer under state
and federal securities laws as may be required by such laws at the time a
transfer is proposed.
 
 
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3.3
Authorization; Binding Obligations.

 
All corporate action on the part of the Company, its officers, directors and
stockholders necessary for the authorization of this Agreement, the performance
of all obligations of the Company hereunder at the Closing and the
authorization, sale, issuance and delivery of the Shares pursuant hereto and the
Conversion Shares pursuant to the Warrant has been taken or will be taken prior
to the Closing. This Agreement, when executed and delivered, will contain valid
and binding obligations of the Company enforceable in accordance with their
terms, except: (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application affecting
enforcement of creditors’ rights; and (b) general principles of equity that
restrict the availability of equitable remedies. The sale of the Shares and the
conversion of the Warrant Shares into Conversion Shares are not and will not be
subject to any preemptive rights or rights of first refusal that have not been
properly waived or complied with.
 

 
3.4
Liabilities.

 
The Company has no material liabilities and, to the best of its knowledge, knows
of no material contingent liabilities not disclosed in the financial statements
of the Company included in the 2006 Form 10-KSB or 2007 Form 10-QSB (the
“Financial Statements”), except current liabilities incurred in the ordinary
course of business subsequent to the dates of the such financial statements
which have not been, either in any individual case or in the aggregate,
materially adverse.
 

 
3.5
Agreements; Action.

 
There are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which the Company is a
party or to its knowledge by which it is bound which may involve:
(i) obligations (contingent or otherwise) of, or payments to, the Company in
excess of $250,000 (other than obligations of, or payments to, the Company
arising from purchase or sale agreements entered into in the ordinary course of
business); or (ii) indemnification by the Company with respect to infringements
of proprietary rights (other than indemnification obligations arising from
purchase or sale or license agreements entered into in the ordinary course of
business).
 

 
3.6
Obligations to Related Parties.

 
Except as may be disclosed in the Financial Statements, there are no obligations
of the Company to officers, directors, stockholders or employees of the Company
other than: (a) for payment of salary for services rendered; (b) reimbursement
for reasonable expenses incurred on behalf of the Company; and (c) for other
standard employee benefits made generally available to all employees (including
stock option agreements outstanding under any stock option plan approved by the
board of directors of the Company). The Company is not a guarantor or indemnitor
of any indebtedness of any other person, firm or corporation.
 

 
3.7
Changes.

 
 
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Since the date of the Financial Statements, and except as may be set forth in
the 2006 Form 10-KSB and 2007 Form 10-QSB, there has not been to the Company’s
knowledge:
 
(a) Any change in the assets, liabilities, financial condition or operations of
the Company from that reflected in the Financial Statements, other than changes
in the ordinary course of business, none of which individually or in the
aggregate has had or is expected to have a material adverse effect on such
assets, liabilities, financial condition, operations or prospects of the
Company;
 
(b) Any resignation or termination of any officer or key employee of the
Company; and the Company, to its knowledge, does not know of the impending
resignation or termination of employment of any such officer or key employee;
 
(c) Any material change, except in the ordinary course of business, in the
contingent obligations of the Company by way of guaranty, endorsement,
indemnity, warranty or otherwise;
 
(d) Any damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the properties, business or prospects or
financial condition of the Company;
 
(e) Any waiver by the Company of a valuable right or of a material debt owed to
it;
 
(f) Any direct or indirect loans made by the Company to any stockholder,
employee, officer or director of the Company;
 
(g) Any material change in any compensation arrangement or agreement with any
employee, officer, director or stockholder;
 
(h) Any declaration or payment of any dividend or other distribution of the
assets of the Company;
 
(i) Any debt, obligation or liability incurred, assumed or guaranteed by the
Company, except those for immaterial amounts and for current liabilities
incurred in the ordinary course of business;
 
(j) Any sale, assignment or transfer of any patents, trademarks, copyrights,
trade secrets or other intangible assets;
 
(k) Any change in any material agreement to which the Company is a party or by
which it is bound which materially and adversely affects the business, assets,
liabilities, financial condition, operations or prospects of the Company;
 
(l) Any other event or condition of any character that, either individually or
cumulatively, has materially and adversely affected the business, assets,
liabilities, financial condition, operations or prospects of the Company; or
 
(m) Any arrangement or commitment by the Company to do any of the acts described
in subsection (a) through (l) above.
 

 
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3.8
Title to Properties and Assets; Liens, etc.

 
The Company has good and marketable title to its properties and assets, and good
title to its leasehold estates, in each case subject to no mortgage, pledge,
lien, lease, encumbrance or charge, other than: (a) those resulting from taxes
which have not yet become delinquent; (b) minor liens and encumbrances which do
not materially detract from the value of the property subject thereto or
materially impair the operations of the Company; and (c) those that have
otherwise arisen in the ordinary course of business of the Company.
 

 
3.9
Patents and Trademarks.

 
To the best of its knowledge, the Company owns or possesses adequate legal
rights (by license or otherwise) to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and other
proprietary rights and processes necessary for its business as now conducted and
as presently proposed to be conducted, without any known infringement of the
rights of others. Except as may be disclosed in the 2006 Form 10-KSB or 2007
Form 10-QSB, there are no outstanding options, licenses or agreements of any
kind relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes of any other person or
entity other than such licenses or agreements arising from the purchase of “off
the shelf” or other standard products. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as presently proposed, would violate any of the patents, trademarks,
service marks, trade names, copyrights or trade secrets or other proprietary
rights of any other person or entity. The Company is not aware that any of its
employees is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would interfere with
their duties to the Company or that would conflict with the Company’s business
as presently proposed to be conducted. Neither the execution nor delivery of
this Agreement, nor the carrying on of the Company’s business by the employees
of the Company, nor the conduct of the Company’s business as presently proposed,
will, to the Company’s knowledge, conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any employee is now obligated.
 

 
3.10
Litigation.

 
There is no action, suit, proceeding or investigation pending or, to the
Company’s knowledge, currently threatened against the Company that questions the
validity of this Agreement or the right of the Company to enter into this
Agreement, or to consummate the transactions contemplated hereby, or which might
result, either individually or in the aggregate, in any material adverse change
in the assets, condition, affairs or prospects of the Company, financially or
otherwise, or any change in the current equity ownership of the Company, nor is
the Company aware that there is any basis for any of the foregoing. The Company
is not a party or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality. There
is no action, suit, proceeding or investigation by the Company currently pending
or which the Company intends to initiate.
 

 
3.11
Taxes.

 
 
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The Company has duly, properly and timely filed all tax returns with federal,
state and local taxing authorities that are required to be filed as of the date
of this Agreement. The Company has no knowledge of any liability of any tax to
be imposed upon its properties or assets as of the date of this Agreement that
is not adequately provided for.
 

 
3.12
Employees.

 
The Company has no collective bargaining agreements with any of its employees.
There is no labor union organizing activity pending or, to the Company’s
knowledge, threatened with respect to the Company. To the Company’s knowledge,
no employee of the Company, nor any consultant with whom the Company has
contracted, is in violation of any term of any employment contract, proprietary
information agreement or any other agreement relating to the right of any such
individual to be employed by, or to contract with, the Company because of the
nature of the business to be conducted by the Company; and, to the Company’s
knowledge, the continued employment by the Company of its present employees, and
the performance of the Company’s contracts with its independent contractors,
will not result in any such violation. The Company has not received any notice
alleging that any such violation has occurred. Except as may be set forth in the
2006 Form 10-KSB or 2007 Form 10-QSB, no employee of the Company has been
granted the right to continued employment by the Company or to any material
compensation following termination of employment with the Company. The Company
is not aware that any officer or key employee, or that any group of key
employees, intends to terminate his, her or their employment with the Company,
nor does the Company have a present intention to terminate the employment of any
officer, key employee or group of key employees.
 

 
3.13
Compliance with Laws; Permits.

 
To its knowledge, the Company is not in violation of any applicable statute,
rule, regulation, order or restriction of any domestic or foreign government or
any instrumentality or agency thereof in respect of the conduct of its business
or the ownership of its properties which violation would materially and
adversely affect the business, assets, liabilities, financial condition,
operations or prospects of the Company. No governmental orders, permissions,
consents, approvals or authorizations are required to be obtained and no
registrations or declarations are required to be filed in connection with the
execution and delivery of this Agreement and the issuance of the Shares or the
Conversion Shares, except such as has been duly and validly obtained or filed,
or with respect to any filings that must be made after the Closing, as will be
filed in a timely manner. Except as may be set forth in the 2006 Form 10-KSB or
2007 Form 10-QSB, the Company has all franchises, permits, licenses and any
similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of the Company and
believes it can obtain, without undue burden or expense, any similar authority
for the conduct of its business as planned to be conducted.
 

 
3.14
Offering Valid.

 
Assuming the accuracy of the representations and warranties of Purchaser
contained in Section 4.2 hereof, the offer, sale and issuance of the Shares and
the Conversion Shares will be exempt from the registration requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws. Neither the Company nor any agent on its behalf has
solicited or will solicit any offers to sell or has offered to sell or will
offer to sell all or any part of the Shares to any person or persons so as to
bring the sale of such Shares by the Company within the registration provisions
of the Securities Act or any state securities laws.
 
 
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3.15
Full Disclosure.

 
The Company has provided Purchaser with all information requested by Purchaser
in connection with the decision to purchase the Shares, including all
information the Company believes is reasonably necessary to make such investment
decision.
 
4.
REPRESENTATIONS AND WARRANTIES OF PURCHASER

 
Purchaser hereby represents and warrants to the Company as follows (such
representations and warranties do not lessen or obviate the representations and
warranties of the Company set forth in this Agreement):
 

 
4.1
Requisite Power and Authority.

 
Purchaser has all necessary power and authority under all applicable provisions
of law to execute and deliver this Agreement and to carry out their provisions.
All action on Purchaser’s part required for the lawful execution and delivery of
this Agreement have been or will be effectively taken prior to the Closing. Upon
its execution and delivery, this Agreement will contain valid and binding
obligations of Purchaser, enforceable in accordance with their terms, except:
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws of general application affecting enforcement of creditors’ rights;
and (b) general principles of equity that restrict the availability of equitable
remedies.
 

 
4.2
Investment Representations.

 
Purchaser understands that neither the Shares nor the Conversion Shares have
been registered under the Securities Act. Purchaser also understands that the
Shares are being offered and sold pursuant to an exemption from registration
contained in the Securities Act based in part upon Purchaser’s representations
contained in this Agreement. Purchaser hereby represents and warrants as
follows:
 
(a) Purchaser Bears Economic Risk. Purchaser has substantial experience in
evaluating and investing in private placement transactions of securities in
companies similar to the Company so that it is capable of evaluating the merits
and risks of its investment in the Company and has the capacity to protect its
own interests. Purchaser must bear the economic risk of this investment
indefinitely until such time as the Shares are registered pursuant to the
Securities Act, or an exemption from registration is available.
 
(b) Acquisition for Own Account. Purchaser is acquiring the Shares and the
Conversion Shares for Purchaser’s own account for investment only, and not with
a view towards their distribution.
 
(c) Purchaser Can Protect Its Interest. Purchaser represents that by reason of
its, or of its management’s, business or financial experience, Purchaser has the
capacity to protect its own interests in connection with the transactions
contemplated in this Agreement. Further, Purchaser is aware of no publication of
any advertisement in connection with the transactions contemplated in this
Agreement.
 
 
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(d) Accredited Investor. Purchaser represents that it is an “accredited
investor” within the meaning of Regulation D under the Securities Act.
 
(e) Company Information. Purchaser has received and read the Financial
Statements and has had an opportunity to discuss the Company’s business,
management and financial affairs with directors, officers and management of the
Company and has had the opportunity to review the Company’s operations and
facilities. Purchaser has also had the opportunity to ask questions of and
receive answers from, the Company and its management regarding the terms and
conditions of this investment.
 
(f) Rule 144. Purchaser acknowledges and agrees that the Shares must be held
indefinitely, unless they are subsequently registered under the Securities Act
or an exemption from such registration is available. Purchaser has been advised
or is aware of the provisions of Rule 144 promulgated under the Securities Act
as in effect from time to time (“Rule 144”), which permits limited resale of
shares purchased in a private placement subject to the satisfaction of certain
conditions, including, among other things: (i) the availability of certain
current public information about the Company, (ii) the manner of the resale,
(iii) the resale occurring following the required holding period under Rule 144
and (iv) the number of shares being sold during any three-month period not
exceeding specified limitations.
 
(g) Legends. Purchaser understands that the Shares, and, if issued, the
Conversion Shares, may bear one or more legends substantially as follows:
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT
RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
 
(h) Residence. If Purchaser is an individual, then Purchaser resides in the
state or province identified in the address set forth opposite Purchaser’s name
on the signature page hereto; if Purchaser is a partnership, corporation,
limited liability company or other entity, then the office or offices of
Purchaser in which its investment decision was made is located at the address or
addresses set forth opposite Purchaser’s name on the signature page hereto.
 
5.
CONDITIONS TO CLOSING

 

 
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5.1
Conditions to Purchaser’s Obligations at the Closing.

 
Purchaser’s obligations to purchase the Shares at the Closing are subject to the
satisfaction, at or prior to the Closing Date, of the following conditions:
 
(a) Representations and Warranties True; Performance of Obligations. The
representations and warranties made by the Company in Section 3 hereof shall be
true and correct in all material respects as of the Closing Date with the same
force and effect as if they had been made as of the Closing Date, and the
Company shall have performed all obligations and conditions herein required to
be performed or observed by it on or prior to the Closing.
 
(b) Legal Investment. On the Closing Date, the sale and issuance of the Shares
and the proposed issuance of the Conversion Shares shall be legally permitted by
all laws and regulations to which Purchaser and the Company are subject (except
for such as may be properly obtained subsequent to the Closing).
 
(c) Consents, Permits, and Waivers. The Company shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement (except for such as may be properly
obtained subsequent to the Closing).
 
(d) Corporate Documents. The Company shall have delivered to Purchaser or
Purchaser’s counsel, copies of all corporate documents of the Company as
Purchaser shall reasonably request.
 
(e) Reservation of Conversion Shares. The Conversion Shares issuable upon
conversion of the Warrant shall have been duly authorized and reserved for
issuance upon such conversion.
 
(f) Warrant. A Warrant substantially in the form attached hereto as Exhibit A
shall have been executed and delivered by the Company.
 
(g) Proceedings and Documents. All corporate and other proceedings in connection
with the transactions contemplated at the Closing hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
substance and form to Purchaser, and Purchaser shall have received all such
counterpart originals or certified or other copies of such documents as may be
reasonably requested.
 

 
5.2
Conditions to Obligations of the Company.

 
The Company’s obligation to issue and sell the Shares at the Closing is subject
to the satisfaction, on or prior to the Closing, of the following conditions:
 
(a) Representations and Warranties True. The representations and warranties in
Section 4 made by Purchaser shall be true and correct in all material respects
at the date of the Closing, with the same force and effect as if they had been
made on and as of said date.
 
 
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(b) Performance of Obligations. Purchaser shall have performed and complied with
all agreements and conditions herein required to be performed or complied with
by Purchaser on or before the Closing.
 
(c) Warrant. A Warrant substantially in the form attached hereto as Exhibit A
shall have been executed and delivered by Purchaser.
 
(d) Consents, Permits and Waivers. The Company shall have obtained any and all
consents, permits and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement (except for such as may be properly
obtained subsequent to the Closing).
 
6.
OTHER AGREEMENTS

 

 
6.1
Indemnification.

 
(a) The Company will indemnify and hold Purchaser harmless for: (i) all claims,
losses, damages, costs, expenses and liabilities, including, but not limited to
reasonable attorney’s fees and court costs, arising from or in connection with
any violation by the Company of the terms of this Agreement or gross negligence
or willful misconduct by the Company in the performance of the terms of this
Agreement, and (ii) any breach of this Agreement (or the exhibits attached
hereto). (b) Purchaser will indemnify, defend and hold the Company harmless
against all claims, losses, damages, costs, expenses and liabilities, including,
but not limited to, reasonable attorneys’ fees and court costs, which result
from Purchaser making any false statement, including but not limited to those
false statements or omissions which cause the exemptions to the registration or
qualification requirements of state and federal securities laws under which the
Company is selling the Shares to be unavailable or which result in the violation
of any such securities laws by the Company.
 

 
6.2
Registration of the Shares.

 
(a) Registration Procedures. The Company shall:
 
(i) as soon as practicable, but in any event no later than thirty (30) days
following the Closing Date (the “Required Filing Date”), prepare and file with
the SEC, a Registration Statement on Form SB-2 (“Registration Statement”) to
enable the resale of the Shares by Purchaser from time to time;
 
(ii) use its best efforts, subject to receipt of necessary information from
Purchaser, to cause the Registration Statement to become effective as soon as
practicable, such efforts to include, without limiting the generality of the
foregoing, preparing and filing with the SEC any financial statements that are
required to be filed prior to the effectiveness of such Registration Statement
(although Purchaser hereby acknowledges that, despite any disclaimer of being an
underwriter, a determination by the SEC that Purchaser is deemed an underwriter
shall relieve the Company of its obligations hereunder);
 
(iii) use its best efforts to prepare and file with the SEC such amendments and
supplements to the Registration Statement and the accompanying prospectus as may
be necessary to keep the Registration Statement current and effective for a
period ending on the earlier of: (A) the second anniversary of the Closing Date,
(B) the date on which Purchaser may sell Shares pursuant to paragraph (k) of
Rule 144, or (C) such time as all Shares purchased by Purchaser pursuant to this
Agreement have been sold pursuant to the Registration Statement or Rule 144, and
to notify Purchaser promptly upon the Registration Statement, and each
post-effective amendment thereto, being declared effective by the SEC;
 
 
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(iv) furnish to Purchaser such number of copies of the Registration Statement
and the accompanying prospectus (including supplemental prospectuses) as
Purchaser may reasonably request in order to facilitate the public sale or other
disposition of all or any of the Shares by Purchaser;
 
(v) bear all expenses (other than underwriting discounts and commissions, if
any) in connection with the procedures in paragraph (i) through (iii) of this
Section 6.2 and the registration of the Shares pursuant to the Registration
Statement;
 
(vi) advise Purchaser, promptly after it shall receive notice or obtain
knowledge of the issuance of any stop order by the SEC delaying or suspending
the effectiveness of the Registration Statement or of the initiation of any
proceeding for that purpose; and it will promptly use its commercially
reasonable efforts to prevent the issuance of any stop order or to obtain its
withdrawal at the earliest possible moment if such stop order should be issued;
and
 
(vii) with a view to making available to Purchaser the benefits of Rule 144 and
any other rule or regulation of the SEC that may at any time permit Purchaser to
sell Shares to the public without registration, the Company covenants and agrees
to use its best efforts to: (A) make and keep public information available, as
those terms are understood and defined in Rule 144, until the earlier of such
date as all of Purchaser’s Shares may be resold pursuant to Rule 144(k) or any
other rule of similar effect or such date as all of Purchaser’s Shares shall
have been resold; and (B) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and under the
Securities Exchange Act of 1934, as amended.
 
(b) Purchaser’s Obligation. It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 6.2 that Purchaser
shall furnish to the Company such information regarding itself, the Shares to be
sold by Purchaser, and the intended method of disposition of such securities as
shall be required to effect the registration of the Shares.
 
7.
MISCELLANEOUS

 

 
7.1
Governing Law.

 
This Agreement shall be governed in all respects by the laws of the State of
California, as such laws are applied to agreements between California residents
entered into and performed entirely in California.
 

 
7.2
Survival.

 
The representations, warranties, covenants and agreements made herein shall
survive any investigation made by Purchaser and the closing of the transactions
contemplated hereby for a period of one (1) year following the Closing. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date of
such certificate or instrument.
 
 
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7.3
Successors and Assigns.

 
Except as otherwise expressly provided herein, the provisions hereof shall inure
to the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto and shall inure to the
benefit of and be enforceable by each person who shall be a holder of the Shares
from time to time.
 

 
7.4
Entire Agreement.

 
This Agreement, the exhibits hereto and the other documents delivered pursuant
hereto constitute the full, complete, exclusive and entire understanding and
agreement between the parties with regard to the subjects hereof and no party
shall be liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein and
therein.
 

 
7.5
Severability.

 
In case any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
 

 
7.6
Amendment; Waiver.

 
This Agreement may be amended or modified only upon the written consent of the
Company and Purchaser. The obligations of the Company and Purchaser under this
Agreement may be waived only with the written consent of party against whom such
waiver is being sought.
 

 
7.7
Delays or Omissions.

 
It is agreed that no delay or omission to exercise any right, power or remedy
accruing to any party, upon any breach, default or noncompliance by another
party under this Agreement shall impair any such right, power or remedy, nor
shall it be construed to be a waiver of any such breach, default or
noncompliance, or any acquiescence therein, or of or in any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on Purchaser’s part
of any breach, default or noncompliance under this Agreement or any waiver on
such party’s part of any provisions or conditions of this Agreement must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, by law or otherwise afforded
to any party, shall be cumulative and not alternative.
 

 
7.8
Notices.

 
All notices required or permitted hereunder shall be in writing and shall be
deemed effectively given: (a) upon personal delivery to the party to be
notified; (b) when sent by confirmed facsimile if sent during normal business
hours of the recipient, if not, then on the next business day; (c) five (5) days
after having been sent by registered or certified mail, return receipt
requested, postage prepaid; or (d) one (1) day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the Company at the
address as set forth on the signature page hereof and to Purchaser at the
address set forth on the signature page hereof, or at such other address as the
Company or Purchaser may designate by ten (10) days advance written notice to
the other party hereto.
 
 
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7.9
Expenses.

 
Each party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
 

 
7.10
Attorneys’ Fees.

 
In the event that any suit or action is instituted to enforce any provision in
this Agreement, the prevailing party in such dispute shall be entitled to
recover from the losing party all fees, costs and expenses of enforcing any
right of such prevailing party under or with respect to this Agreement,
including without limitation, such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
 

 
7.11
Titles and Subtitles.

 
The titles of the sections and subsections of this Agreement are for convenience
of reference only and are not to be considered in construing this Agreement.
 

 
7.12
Counterparts.

 
This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one instrument.
 

 
7.13
Broker’s Fees.

 
Each party hereto represents and warrants that no agent, broker, investment
banker, person or firm acting on behalf of or under the authority of such party
hereto is or will be entitled to any broker’s or finder’s fee or any other
commission directly or indirectly in connection with the transactions
contemplated herein. Each party hereto further agrees to indemnify each other
party for any claims, losses or expenses incurred by such other party as a
result of the representation in this Section 6.13 being untrue.
 

 
7.14
Confidentiality.

 
Each party hereto agrees that, except with the prior written consent of the
other party, it shall at all times keep confidential and not divulge, furnish or
make accessible to anyone any confidential information, knowledge or data
concerning or relating to the business or financial affairs of the other parties
to which such party has been or shall become privy by reason of this Agreement
or the Related Agreements, discussions or negotiations relating to this
Agreement or the Related Agreements, the performance of its obligations
hereunder or the ownership of the Shares purchased hereunder. The provisions of
this Section 6.15 shall be in addition to, and not in substitution for, the
provisions of any separate nondisclosure agreement executed by the parties
hereto.
 
 
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7.15
Pronouns.

 
All pronouns contained herein, and any variations thereof, shall be deemed to
refer to the masculine, feminine or neutral, singular or plural, as to the
identity of the parties hereto may require.
 

 
7.16
California Corporate Securities Law.

 
THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN
QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND
THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION OR IN THE ABSENCE OF AN
EXEMPTION FROM SUCH QUALIFICATION IS UNLAWFUL. PRIOR TO ACCEPTANCE OF SUCH
CONSIDERATION BY THE COMPANY, THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
FROM SUCH QUALIFICATION BEING AVAILABLE.
 
 
[Remainder of page intentionally left blank.]
 

 
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IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
Agreement as of the date set forth in the first paragraph hereof.

 
Auriga Laboratories, Inc.
 
 
By:
     
Philip S. Pesin
   
Chief Executive Officer
       
 
Address:      10635 Santa Monica Blvd. #120
   
          Los Angeles, California 90025
 

 
“PURCHASER”
     
 
               
By:
       
Name:
       
Title:
                         
 
Address:
                       
Number of Shares:
           

 
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EXHIBIT A
 
FORM OF WARRANT
 
(attached hereto)

 
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