Document:

exhibit101.htm

    CONVERTIBLE PROMISSORY
NOTE

    $240,000 PLUS INTEREST DUE &
PAYABLE

    DOCUMENT
A-01152008

    

    THIS NOTE
AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS NOTE AND THE SHARES ISSUABLE
UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE
EXEMPTION OR SAFE HARBOR PROVISION.

    

    FOR VALUE
RECEIVED, on the Effective Date, as defined below, Auriga Laboratories Inc. as
Obligor ("Borrower,” or “Obligor”), hereby promises to pay to the Lender
(“Lender” or “ Holder”), as defined below, the Principal Sum, as defined below,
along with the Interest Rate, as defined below, according to the terms
herein.

    

    

    
      	
               

              The
      "Effective Date" shall be:

            	
               

              January
      15, 2008

            
	
               

              The
      "Lender" shall be:

            	
               

              JMJ
      Financial / Its Principal, or Its Assignees

            
	
               

              The
      "Principal Sum" shall be:

            	
               

              $240,000
      (two hundred forty thousand US Dollars); Subject to the following:
      accrued, unpaid interest shall be added to the Principal
    Sum.

            
	
               

              The
      “Consideration” shall be:

               

            	
               

              $200,000
      (two hundred thousand) dollars in the form of cashier’s
    check.

            
	
               

              The
      "Interest Rate" shall be:

            	
               

              12%
      one-time interest charge on the Principal
      Sum.      No interest or principal payments
      are required until the Maturity Date, but both principal and interest may
      be included in conversion prior to maturity date.

            
	
               

               

              The
      "Conversion Price" shall be the following price:

            	
               

              As
      applied to the Conversion Formula set forth in 2.2, sixty percent of the
      average of the 3 (three) lowest closing bid prices in the 20 trading days
      previous to the conversion; as applies to Auriga Laboratories Inc. voting
      common stock.

            
	
               

              The
      “Prepayment Terms” shall be:

            	
               

              Prepayment
      is permitted at any time in the amount of 130% of the outstanding
      principal and interest note balance at the time of the
      prepayment.

               

            
	
               

              The
      "Maturity Date" is the date upon which the Principal Sum of this Note, as
      well as any unpaid interest shall be due and payable, and that date shall
      be:

            	
               

               

              January
      15, 2011

            

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    ARTICLE 1 PAYMENT-RELATED
PROVISIONS

    

    1.1 Demand. Upon notice by holder, this
Note is payable on Demand at any time for any reason.

    1.2 Interest Rate. Subject to the
Holder's right to convert, interest payable on this Note will accrue interest at
the Interest Rate and shall be applied to the Principal Sum.

    

    

    

    ARTICLE 2 CONVERSION
RIGHTS

    

    The Holder will have the right to
convert the Principal Sum and accrued interest under this Note into Shares of
the Borrower's Common Stock as set forth below.

    

    2.1 Conversion Rights and Cashless
Exercise. The Holder will have the right at its election from and after the
Effective Date, and then at any time, to convert all or part of the outstanding
and unpaid Principal Sum and accrued interest into shares of fully paid and
nonassessable shares of common stock of Auriga Laboratories Inc. (as such stock
exists on the date of issuance of this Note, or any shares of capital stock of
Auriga Laboratories Inc.  into which such stock is
hereafter changed or reclassified, the "Common Stock") as per the Conversion
Formula set forth in Section 2.2. Any such conversion shall be cashless, and
shall not require further payment from Holder.  Unless otherwise
agreed in writing by both the Borrower and the Holder, at no time will the
Holder convert any amount of the Note into common stock that would result in the
Holder owning more than 4.99% of the common stock outstanding of Auriga
Laboratories Inc.   Shares from any such conversion will be
delivered to Holder within 2 (two) business days of conversion notice delivery
(see 3.1) via 10:30am priority overnight delivery service (see Section
2.6).

    

    

    2.2.
Conversion Formula. The number of shares issued through conversion is the
conversion amount divided by the conversion price.

    

    # Shares
= Conversion
Amount

         Conversion
Price

    

    

    

    2.3
Conversion Formula Adjustments. The Conversion Formula described in Sections 2.2
and the number and kind of shares or other securities to be issued upon
conversion is subject to adjustment upon any of the events as described in 2.3.1
to 2.3.3, or any other event as mutually agreed in writing by both the Holder
and Borrower.  The adjustment due to any of the described events shall
be: The result of the Conversion Formula described in 2.2 above shall be
multiplied by (2) two, such that the number of shares calculated in the
Conversion Formula would be doubled.

    

    2.3.1.
Merger, Consolidation or Sale of Assets. If the Borrower at any time
consolidates with or merges into, or sells or conveys all or substantially all
of its assets to, any other entity, the unpaid Principal Sum of this Note and
accrued interest thereon will thereafter be deemed to evidence the right to
purchase such number and kind of shares or other securities and property as
would have been issuable or distributable, on account of such consolidation,
merger, sale or conveyance, upon or with respect to the securities subject to
the conversion or purchase right immediately prior to such consolidation,
merger, sale or conveyance. The foregoing provision will similarly apply to
successive transactions of a similar nature by any such successor or purchaser.
Without limiting the generality of the foregoing, the anti-dilution provisions
of this Note will apply to such securities of such successor or purchaser after
any such consolidation, merger, sale or conveyance.

    

    2.3.2. Reclassification. If the
Borrower at any time, by reclassification or otherwise, changes the Common Stock
into the same or a different number of securities of any class or classes, the
unpaid Principal Sum of this Note and accrued interest thereon will thereafter
be deemed to evidence the right to purchase such number and kind of securities
as would have been issuable as the result of such change with respect to the
Common Stock immediately prior to such reclassification or other
change.

    

    2.3.3.
Stock Splits, Stock Dividends, and Combinations.  If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a stock dividend is paid on the Common
Stock.

    

    2.4.
Adjustment Upon Dilutive Offers, Agreements, or Sales.  If the
Borrower, at any time while this Note is outstanding, enters into an agreement
under which it issues or agrees to issue either its common stock, options, or
warrants to purchase or convert to its common stock at a price or exercise price
or conversion price (a "Subsequent Share Price"), as the case may be, that is
less than the conversion price or subsequent conversion formula result set forth
in Section 2.2, then the conversion price set forth in Section 2.2. shall be
automatically adjusted to equal the Subsequent Share Price.

    

    2.5
Reservation of Shares. As of the issuance date of this Note and for the
remaining period during which the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note constitutes full authority to its officers, agents and
transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note.

    

    2.6.  Delivery
of Conversion Shares.  Shares from any such conversion will be
delivered to Holder within 2 (two) business days of conversion notice delivery
(see 3.1) via 10:30am priority overnight delivery service (see “Share Delivery”
attachment).  If those shares are not delivered in accordance with
this timeframe stated in this Section 2.6, at any time for any reason prior to
offering those shares for sale in a private transaction or in the public market
through its broker, Holder may rescind that particular conversion to have the
conversion amount returned to the note balance with the conversion shares
returned to the Borrower.

    

    

    

    

    

    

    

    ARTICLE 3
MISCELLANEOUS

    

    3.1. Notices. Any notice required or
permitted hereunder must be in writing and either personally served, sent by
facsimile or email transmission, or sent by overnight
courier.  Notices will be deemed effectively delivered at the time of
transmission if by facsimile or email, and if by overnight courier the business
day after such notice is deposited with the courier service for
delivery.

    

    3.2. Amendment Provision. The term
"Note" and all reference thereto, as used throughout this instrument, means this
instrument as originally executed, or if later amended or supplemented, then as
so amended or supplemented.

    

    3.3. Assignability. This Note will be
binding upon the Borrower and its successors and permitted assigns, and will
inure to the benefit of the Holder and its successors and permitted assigns, and
may be assigned by the Holder.

    

    3.3. Governing Law. This Note will be
governed by, and construed and enforced in accordance, with the laws of the
State of Florida, without regard to the conflict of laws principles
thereof.

    

    3.5. Maximum Payments. Nothing
contained herein may be deemed to establish or require the payment of a rate of
interest or other charges in excess of the maximum permitted by applicable law.
In the event that the rate of interest required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum will be credited against amounts owed by the Borrower to the Holder
and thus refunded to the Borrower.

    

    3.6.
Attorney Fees. In the event any attorney is employed by either party to this
Note with regard to any legal or equitable action, arbitration or other
proceeding brought by such party for the enforcement of this Note or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding will be
entitled to recover from the other party reasonable attorneys' fees and other
costs and expenses incurred, in addition to any other relief to which the
prevailing party may be entitled.

    

    3.7. This
section intentionally left blank due to removal of the terms of this
section.

    

    3.8. No
Public Announcement. No public announcement may be made regarding this Note,
payments, or conversions without written permission by both Borrower and
Holder.

    

    3.9.
Opinion of Counsel. In the event that an opinion of counsel is needed for any
matter related to this Note, Holder has the right to have any such opinion
provided by its counsel.  Holder also has the right to have any such
opinion provided by Borrower’s counsel.

    

    3.10.
Additional Financing.  The Holder, at its option, may invest up to an
additional $1,000,000 (one million dollars), in part, whole, and/or multiple
transactions, in Auriga Laboratories Inc. on the same or better terms as set
forth in this agreement for a period of three years from the Effective
Date.  In the event that Holder wishes to exercise this right, the
Borrower will be notified by the Notice of Additional Financing Form, and any
additional financing will be memorialized by an additional Convertible
Promissory Note(s).

    

    3.11.
Effective Date.  This Note will become effective only upon occurrence
of the three following events: the Effective Date of January 15, 2008 has been
reached, execution by both parties, and delivery of valid payment by the
Lender.

    

    3.12.
Director’s Resolution.  Once effective, Borrower will execute and
deliver to Holder a copy of a Board of Director’s resolution resolving that this
note is validly issued, paid, and effective.

    

    

    

    

    

    BORROWER[S]:                                                                                     LENDER/HOLDER:

    

    

    /s/ JMJ Financial

    ____________________________                                                                                                ____________________________

    Frank
Greico                                                                                     JMJ
Financial / Its Principal

    CEO &
CFO

    Auriga
Laboratories Inc.

    

    Dated:
________________________                                                                                                Dated:
________________________

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    SAMPLE

    

    NOTICE OF
CONVERSION

    

    (To be
executed by the Holder in order to convert the Note)

    

    The
undersigned hereby elects to convert a portion of the Note issued by Auriga
Laboratories Inc. on January 15, 2008 into Shares of Common Stock of Auriga
Laboratories Inc. according to the conditions set forth in such Note, as of the
date written below.

    

    Date of
Conversion:________________________________________________

    

    Conversion
Amount:__________________________________________________

    

    Conversion
Price:__________________________________________________

    

    Shares To
Be Delivered:_____________________________________________

    

    Signature:________________________________________________________

    

    Print
Name:______________________________________________________

    

    Address:________________________________________________________

    

    _______________________________________________________________

    

     _______________________________________________________________

    

    

    

    

    Shares must be delivered to Holder
within 2 (two) business days of conversion notice via 10:30am priority overnight
delivery service in accordance with Section 2.6.

    
      
              

                  DOCUMENT
A-01152008      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    NOTICE OF
ADDITIONAL FINANCING FORM

    

    (To be
executed by Holder when intending to invest additional funds)

    

    

    This Form
is notification that I intend to invest additional funds into Auriga
Laboratories Inc. as set forth in Section 3.10 of the Convertible Promissory
Note dated January 15, 2008,

    

    

    Intended
Amount: $_______________________

    

    

    Intended
Execution Date of Documentation: ________________________________

    

    

    Intended
Delivery Date of Payment: _____________________________

    

    

    

    

    

    _______________________________________

    

    

    Dated:____________________________________

    

    
      
              

                  DOCUMENT
A-01152008      
    

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    SHARE
DELIVERY ATTACHMENT

    

    EXAMPLE

    

    2.6.  Delivery
of Conversion Shares.  Shares from any such conversion will be
delivered to Holder within 2 (two) business days of conversion notice delivery
(see 3.1) via 10:30am priority overnight delivery service.  If those
shares are not delivered in accordance with this timeframe stated in this
Section 2.6, at any time for any reason prior to offering those shares for sale
in a private transaction or in the public market through its broker, Holder may
rescind that particular conversion to have the conversion amount returned to the
note balance with the conversion shares returned to the Borrower.

    

    Example:

    

    Holder
delivers conversion notice to Borrower at 4:45pm eastern time on Monday January
1st.

    

    Borrower’s
transfer agent must send shares to Holder via 10:30am overnight delivery no
later than Tuesday January 2nd.

    

    Holder
must have received the shares or received delivery attempt no later than 10:30am
eastern time on Wednesday January 3rd.

    

    
      
              

                  DOCUMENT
A-01152008exhibit102.htm

    CONVERTIBLE PROMISSORY
NOTE

     

    $1,800,000 PLUS INTEREST DUE &
PAYABLE

     

    DOCUMENT B-01152008

     

     

     

    THIS NOTE AND THE SHARES ISSUABLE UPON
CONVERSION OF THIS NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. THIS NOTE AND THE SHARES ISSUABLE UPON CONVERSION OF THIS NOTE
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT OR APPLICABLE EXEMPTION OR SAFE HARBOR
PROVISION.

     

     

     

    FOR VALUE RECEIVED, on the Effective Date, as
defined below, Auriga
Laboratories Inc. as Obligor ("Borrower,” or “Obligor”), hereby promises
to pay to the Lender (“Lender” or “ Holder”), as defined below, the Principal
Sum, as defined below, along with the Interest Rate, as defined below, according
to the terms herein. 

     

     

     

     

     

    
      	
               

               

              The "Effective Date"
      shall be: 

               

            	
               

               

              January 15,
      2008

               

            
	
               

               

              The "Lender" shall
      be: 

               

            	
               

               

              JMJ Financial / Its
      Principal, or Its Assignees

               

            
	
               

               

              The "Principal Sum"
      shall be: 

               

            	
              
$1,800,000 (one
      million eight hundred thousand) US Dollars; Subject to the following:
      accrued, unpaid interest shall be added to the Principal Sum.

               

            
	
               

               

              The “Consideration”
      shall be:

               

               

               

            	
               

               

              $1,800,000 (one
      million eight hundred thousand) dollars in the form of the Secured &
      Collateralized Promissory Note Document C-01152008 (including Security
      & Collateral Agreement).

               

            
	
               

               

              The "Interest Rate"
      shall be: 

               

            	
               

               

              12% one-time
      interest charge on the Principal Sum.   No interest or principal
      payments are required until the Maturity Date, but both principal and
      interest may be included in conversion prior to maturity date.
 

               

            
	
               

               

               

               

              The "Conversion
      Price" shall be the following price: 

               

            	
               

               

              As applied to the
      Conversion Formula set forth in 2.2, sixty-five percent of the average of
      the 3 (three) lowest closing bid prices in the 20 trading days previous to
      the conversion; as applies to Auriga Laboratories Inc. voting common
      stock.

               

            
	
               

               

              The "Maturity Date"
      is the date upon which the Principal Sum of this Note, as well as any
      unpaid interest shall be due and payable, and that date shall be:

               

               

               

            	
              

               

              January 15,
      2011

               

            
	
               

               

              The “Prepayment
      Terms” shall be:

               

            	
               

               

              Prepayment is
      permitted at any time in the amount of 130% of the outstanding principal
      and interest note balance at the time of the prepayment.

               

               

               

            

    

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    ARTICLE 1 PAYMENT-RELATED PROVISIONS

     

     

     

               
1.1 Interest Rate. Subject to the Holder's right to convert, interest payable on
this Note will accrue interest at the Interest Rate and shall be applied to the
Principal Sum.

     

     

     

     

     

     

     

    ARTICLE 2 CONVERSION
RIGHTS

     

     

     

               
The Holder will have the right to convert the Principal Sum and accrued interest
under this Note into Shares of the Borrower's Common Stock as set forth
below.

     

     

     

               
2.1 Conversion Rights and Cashless Exercise. Subject to the terms set forth in
Section 2.7, the Holder will have the right at its election from and after the
Effective Date, and then at any time, to convert all or part of the outstanding
and unpaid Principal Sum and accrued interest into shares of fully paid and
nonassessable shares of common stock of Auriga Laboratories Inc. (as such stock
exists on the date of issuance of this Note, or any shares of capital stock of
Auriga Laboratories Inc. into which such stock is hereafter changed or
reclassified, the "Common Stock") as per the Conversion Formula set forth in
Section 2.2. Any such conversion shall be cashless, and shall not require
further payment from Holder.  Unless otherwise agreed in writing by both
the Borrower and the Holder, at no time will the Holder convert any amount of
the Note into common stock that would result in the Holder owning more than
4.99% of the common stock outstanding of Auriga Laboratories Inc.
  Shares from any such conversion will be delivered to Holder within 2
(two) business days of conversion notice delivery (see 3.1) via 10:30am priority
overnight delivery service (see Section 2.6).

     

     

     

     

     

    2.2. Conversion Formula.
The number of shares issued through conversion is the conversion amount divided
by the conversion price.

     

     

     

    #
Shares = Conversion
Amount

     

               
     Conversion Price

     

     

     

     

     

     

     

    2.3
Conversion Formula Adjustments. The Conversion Formula described in Sections 2.2
and the number and kind of shares or other securities to be issued upon
conversion is subject to adjustment upon any of the events as described in 2.3.1
to 2.3.3, or any other event as mutually agreed in writing by both the Holder
and Borrower.  The adjustment due to any of the described events shall be:
The result of the Conversion Formula described in 2.2 above shall be multiplied
by (2) two, such that the number of shares calculated in the Conversion Formula
would be doubled. 

     

     

     

    2.3.1. Merger, Consolidation or Sale of
Assets. If the Borrower at any time consolidates with or merges into, or sells
or conveys all or substantially all of its assets to, any other entity, the
unpaid Principal Sum of this Note and accrued interest thereon will thereafter
be deemed to evidence the right to purchase such number and kind of shares or
other securities and property as would have been issuable or distributable, on
account of such consolidation, merger, sale or conveyance, upon or with respect
to the securities subject to the conversion or purchase right immediately prior
to such consolidation, merger, sale or conveyance. The foregoing provision will
similarly apply to successive transactions of a similar nature by any such
successor or purchaser. Without limiting the generality of the foregoing, the
anti-dilution provisions of this Note will apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or
conveyance.

     

     

     

               
2.3.2. Reclassification. If the Borrower at any time, by reclassification or
otherwise, changes the Common Stock into the same or a different number of
securities of any class or classes, the unpaid Principal Sum of this Note and
accrued interest thereon will thereafter be deemed to evidence the right to
purchase such number and kind of securities as would have been issuable as the
result of such change with respect to the Common Stock immediately prior to such
reclassification or other change. 

     

     

     

    2.3.3. Stock Splits,
Stock Dividends, and Combinations.  If the shares of Common Stock are
subdivided or combined into a greater or smaller number of shares of Common
Stock, or if a stock dividend is paid on the Common Stock. 

     

     

     

    2.4.
Adjustment Upon Dilutive Offers, Agreements, or Sales.  If the Borrower, at
any time while this Note is outstanding, enters into an agreement under which it
issues or agrees to issue either its common stock, options, or warrants to
purchase or convert to its common stock at a price or exercise price or
conversion price (a "Subsequent Share Price"), as the case may be, that is less
than the conversion price or subsequent conversion formula result set forth in
Section 2.2, then the conversion price set forth in Section 2.2. shall be
automatically adjusted to equal the Subsequent Share Price.

     

     

     

    2.5
Reservation of Shares. As of the issuance date of this Note and for the
remaining period during which the conversion right exists, the Borrower will
reserve from its authorized and unissued Common Stock a sufficient number of
shares to provide for the issuance of Common Stock upon the full conversion of
this Note. The Borrower represents that upon issuance, such shares will be duly
and validly issued, fully paid and non-assessable. The Borrower agrees that its
issuance of this Note constitutes full authority to its officers, agents and
transfer agents who are charged with the duty of executing and issuing stock
certificates to execute and issue the necessary certificates for shares of
Common Stock upon the conversion of this Note. 

     

     

     

    2.6.
 Delivery of Conversion Shares.  Shares from any such conversion will
be delivered to Holder within 2 (two) business days of conversion notice
delivery (see 3.1) via 10:30am priority overnight delivery service (see “Share
Delivery” attachment).  If those shares are not delivered in accordance
with this timeframe stated in this Section 2.6, at any time for any reason prior
to offering those shares for sale in a private transaction or in the public
market through its broker, Holder may rescind that particular conversion to have
the conversion amount returned to the note balance with the conversion shares
returned to the Borrower.

     

     

     

    2.7. 
Discharge By Payment.  Conversions under this Convertible Promissory Note
Document B-01152008 are available only after the Conversion Amount described
herein is discharged by payment of equal or greater value from the Secured &
Collateralized Promissory Note Document C-01152008 by either, at the Holder’s
choice, cash payment, or surrender of security/collateral, or other negotiated
form of payment mutually agreed to in writing.

     

     

     

     

     

     

     

    ARTICLE 3 MISCELLANEOUS 

     

     

     

               
3.1. Notices. Any notice required or permitted hereunder must be in writing and
either personally served, sent by facsimile or email transmission, or sent by
overnight courier.  Notices will be deemed effectively delivered at the
time of transmission if by facsimile or email, and if by overnight courier the
business day after such notice is deposited with the courier service for
delivery.

     

     

     

               
3.2. Amendment Provision. The term "Note" and all reference thereto, as used
throughout this instrument, means this instrument as originally executed, or if
later amended or supplemented, then as so amended or supplemented. 

     

     

     

               
3.3. Assignability. This Note will be binding upon the Borrower and its
successors and permitted assigns, and will inure to the benefit of the Holder
and its successors and permitted assigns, and may be assigned by the Holder.

     

     

     

               
3.4. Governing Law. This Note will be governed by, and construed and enforced in
accordance, with the laws of the State of Florida, without regard to the
conflict of laws principles thereof. 

     

     

     

               
3.5. Maximum Payments. Nothing contained herein may be deemed to establish or
require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law. In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum will be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.

     

     

     

    3.6.
Attorney Fees. In the event any attorney is employed by either party to this
Note with regard to any legal or equitable action, arbitration or other
proceeding brought by such party for the enforcement of this Note or because of
an alleged dispute, breach, default or misrepresentation in connection with any
of the provisions of this Note, the prevailing party in such proceeding will be
entitled to recover from the other party reasonable attorneys' fees and other
costs and expenses incurred, in addition to any other relief to which the
prevailing party may be entitled. 

     

     

     

    3.7.
No Public Announcement. No public announcement may be made regarding this Note,
payments, or conversions without written permission by both Borrower and
Holder.

     

     

     

    3.8.
Opinion of Counsel. In the event that an opinion of counsel is needed for any
matter related to this Note, Holder has the right to have any such opinion
provided by its counsel.  Holder also has the right to have any such
opinion provided by Borrower’s counsel.

     

     

     

    3.9.
Effective Date.  This Note will become effective only upon occurrence of
the three following events: the Effective Date of January 15, 2008 has been
reached, execution by both parties, and delivery of valid payment by the Lender
in the form of the Secured & Collateralized Promissory Note Document
C-01152008 (including Security & Collateral Agreement)..  

     

     

     

    3.10.
Director’s Resolution.  Once effective, Borrower will execute and deliver
to Holder a copy of a Board of Director’s resolution resolving that this note is
validly issued, paid, and effective.

     

     

     

     

     

     

     

     

     

     

     

    BORROWER[S]:
                                                    
LENDER/HOLDER: 

     

                                                   

     

     

     

               
                                                                       
/s/ JMJ Financial

     

    ____________________________
                          
____________________________ 

     

    Frank
Greico                                                   
            JMJ Financial
/ Its Principal

     

    CEO & CFO

     

    Auriga Laboratories
Inc.

     

    
Dated:
________________________                        
Dated: ________________________

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    SAMPLE

     

     

     

    NOTICE OF
CONVERSION

     

     

     

    (To be executed by the
Holder in order to convert the Note)

     

     

     

    The undersigned hereby
elects to convert a portion of the Note issued by Auriga Laboratories Inc. on
January 15, 2008 into Shares of Common Stock of Auriga Laboratories Inc.
according to the conditions set forth in such Note, as of the date written
below.

     

     

     

    Date of
Conversion:________________________________________________

     

     

     

    Conversion
Amount:__________________________________________________

     

     

     

    Conversion
Price:__________________________________________________

     

     

     

    Shares To Be
Delivered:_____________________________________________

     

     

     

    Signature:________________________________________________________

     

     

     

    Print
Name:______________________________________________________

     

     

     

    Address:________________________________________________________

     

     

     

    _______________________________________________________________

     

     

     

     _______________________________________________________________

     

     

     

     

     

     

     

     

     

    Shares must be delivered to Holder
within 2 (two) business days of conversion notice via 10:30am priority overnight
delivery service in accordance with Section 2.6.  

     

     Share
Delivery Attachment

     

     

     

    EXAMPLE

     

     

     

    2.6.  Delivery of
Conversion Shares.  Shares from any such conversion will be delivered to
Holder within 2 (two) business days of conversion notice delivery (see 3.1) via
10:30am priority overnight delivery service.  If those shares are not
delivered in accordance with this timeframe stated in this Section 2.6, at any
time for any reason prior to offering those shares for sale in a private
transaction or in the public market through its broker, Holder may rescind that
particular conversion to have the conversion amount returned to the note balance
with the conversion shares returned to the Borrower.

     

     

     

    Example:

     

     

     

    Holder delivers conversion
notice to Borrower at 4:45pm eastern time on Monday January 1st.

     

     

     

    Borrower’s transfer agent
must send shares to Holder via 10:30am overnight delivery no later than Tuesday
January 2nd.

     

     

     

    Holder must have received
the shares or received delivery attempt no later than 10:30am eastern time on
Wednesday January 3rd.

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